|
|
|
Homeowners Tax Breaks
In an effort to spur the sagging real estate sector (which is dragging much of the economy along with it), the Obama administration recently released several proposals to make homeownership more appealing for buyers.
The centerpiece is a tax credit for home purchases, which makes homeownership more palatable when you're looking at assuming hefty home loan payments. Let's explain in detail what this means to a new-home buyer today:
1. The credit is equivalent to 10% of the purchase price of the home -- although it's capped at $8,000, and applies only to first-time home buyers and principal residences. But unlike an earlier $7,500 home buyer tax credit, this one does not have to be repaid.
For the purpose of the legislation, a "first-time home buyer" is someone who hasn't owned a principal residence for three years before buying a house. That means if you've owned a vacation home -- but not a principal residence -- within the past three years, you would still qualify for the credit.
2. Only those who purchase a home on or after January 1 and before Dec. 1, 2009 are eligible for the credit. Anyone who bought a home last year won't be able to take advantage of it.
3. The tax credit is subject to income limitations. Single buyers need a modified adjusted gross income of $75,000 or less to qualify for the full credit, and $150,000 for married couples. Those earning more than these thresholds may be eligible for reduced credits.
4. The tax credit is "refundable," which means that qualified buyers can take advantage of it even if they don't have much tax liability.
5. Buyers have to own the home for at least three years to capitalize on the credit. If they sell the home before then, they will have to return the credit to the government. (Exceptions will be made in certain cases, such as death or divorce.)
Today’s buyers definitely meet with obstacles that buyers a year or so ago didn’t face. With all of the information available on the internet, do your research! The bottom line is this: when you are buying a home and looking for a mortgage, it is for you to live in as well as enjoy the tax benefits you can come from it.
The market is constantly evolving – we don’t know where housing prices will be six months from now, let alone a year. If the home is what you are looking for, it is affordable, and you are qualified for the mortgage – buy it. And please know that while prices may drop a few more percentage points, they may also rise – home ownership is a cycle and it is unpredictable where it will be when you decide to jump off the fence.
Written by Suzanne Grace, a real estate agent in Thousand Oaks, Calif.
|
|
|
|
|
