First Time Home Buyer Credit for 2009
The Stimulus Plan was signed into law by President Obama Feb. 2009. It contains a new tax credit for first-time homebuyers. Essentially, first-time homebuyers within certain income limits who purchase a home in 2009 before December 1, 2009 will receive a tax credit of up to $8,000. The program is similar to the $7,500 tax credit which applied to home purchases made in 2008 after April 9. Here are some bullet points about the new program:
This tax credit is applicable only to first-time homebuyers
To qualify as a first-time home buyer as defined in the programs, the purchaser (and the purchaser's spouse) may not have owned a home in the three years prior to the purchase date of the home. Single family homes qualify for the program. The home must be the primary residence.
Subject to adjusted gross income limitations (full credit for AGI less than $75,000 single/$150,000 joint, phased out for AGI up to $95,000 single/ $170,000 joint).
The amount for credit is the lesser of 10% of the home purchase price $8,000
The $8,000 credit will not need to be repaid, if the home is owned for more than three years. If the home is sold within the first three years, the full amount of the credit is due upon sale
The credit will be claimed on the purchaser's income taxes. Any amount in excess of taxes owed will be refunded to the purchaser.
There were other housing related provisions to the plan that were a non-event for us here in Georgia.
Now the real question, how does the stimulus plan affect interest rates. When the government is looking at a $787 billion dollar stimulus package, they're going to have to raise the money somewhere. Most likely by auctioning more treasury securities and to make those attractive, they'll need to offer rates of return (i.e. higher rates) that make them appealing to potential investors. In the long run, we're going to see mortgage rates increase. My guess would be that rates are going to be higher 6-9 months down the road than where they are today.
We've been saying it for a long time, "now's the time to buy". Those words have never rung truer. We still have mortgage rates at 50 year lows. There are tremendous deals to be had on homes. Spread word and let's get rocking and rolling in '09.