Sacramento Real Estate Views

Get $18000 To Buy a Home In 2009

Tax Credit for First Time Home Buyers in 2009

Some time ago, I was in a meeting with some local lenders and they brought up a great point worth mentioning about the consumer tax credits given by the government to inspire first time home buyers to purchase in 2009.

The lenders we met with told us that a first time home buyer could file for the $8000 tax credit on their 2008 taxes BEFORE the home is purchased.  This, as it has turned out, was dead wrong.   See below.

CORRECTION: It has been brought to my attention that this information was incorrect as it was presented to me by the lenders in question.  According to sources since this article was published, the IRS considers filing before the close of escrow tax fraud.  Again, you will need to verify all tax related information with a tax professional.

(Disclaimer:  Check with your accountant or a tax professional to verify any and all tax related information!)

It’s free money to buy a home in 2009 when the prices are going to be at the lowest point in this market cycle. (Hopefully!)  You must purchase by December 1, 2009.

Last year, there was a $7500 “loan”, that’s what it amounted to, that had to be repaid in $500 increments until satisfied.   This year a purchase could result in a $18000 wind fall depending on who is buying and where.

$8000 First Time Home Buyer Tax Credit

The basic guidelines are:

1.  You must be a first time home buyer and purchase before December 1, 2009.

2.  This is not a loan and does not need to be repaid unless the home is resold within 3 years from the date of purchase.

3.  The credit reduces your tax liability.  If  you taxes amount to less than $8000, they send you a check for the balance.

4.  If you’re single and make $75,000 or more or married and make $150,000 or more, you don’t qualify.

5.  Purchase is for primary residences only.  No investment property.

6.  The seller cannot be a relative of the buyer.

7.  This offer is valid from January 1 to December 1, 2009.

$10,000 from Arnold, the Housing Barbarian!

The state of California is handing out $10000 to people buying a new construction home this year in an effort to help stimulate new home buying.

The basics of this plan are:

1.  This credit if for new home construction only.  They will force you to buy a new home whether you like it or not.  Now that is barbaric!

2.  It’s a tax credit that you don’t have to pay back providing you live in the home as your primary residence for 2 years.

3.  The tax credit is good for 5% of the purchase price of the home to a point.  It’s not a flat $10,000 no matter the purchase price.

For example:

If the home you purchase costs $150,000, you get $7500 NOT $10,000 as $7500 represents 5% of the purchase price of the home.  Buy a $200,000 new home and you get the whole enchilada.  Buy a home that is $450,000 and you still get the $10,000 NOT 5% of the $450,000 purchase price.

4.  This tax credit will be given in equal increments over a 3 year period.

5.  Not limited to first time home buyers.  This is for anyone purchasing a new home.

6.  No income limitations.  Donald Trump gets one too! (Either that or Arnold is looking for a new mansion!)

7.  The home must be your primary residence.  No down payment requirement.

8.  Only open to the first 10,000 new homes purchased.  Limited Time Offer!

These tax credits can be used together if you’re a first time home buyer giving you an $18,000 tax credit, almost $12,000 for this year alone and the other roughly $6,000 divided up over the next 2 years.

With prices as low as they are in our region, if you’re in the position to do so, it might be time for an upgrade in your primary residence.

Give me a call if we can help you get into a home.

Thanks for visiting!  That means you too, HUD.gov!

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Tags: sacramento real estate

This entry was posted on Sunday, March 22nd, 2009 at 6:31 am and is filed under Real Estate Market Commentary. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

1. Kevin McNeely said at April 16th, 2009 at 11:25 am

   Your information regarding the first time homebuyer tax credit is incorrect. The IRS made a presentation at the Oklahoma Mortgage Banker’s Association conference last week and unequivocally stated that filing for the tax credit prior to closing constitutes tax fraud. They have already identified 10 nationwide tax preparers that are/were perpetrating schemes and have created 10 new tax fraud detection units to pursue these type cases.

2. robsaxe said at April 16th, 2009 at 1:26 pm

   Thanks Kevin, I appreciate the correction. As I said, please check with your tax specialist before making any financial decisions.

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