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Economic Stimulus and the First-time Home Buyer Tax Credit

February 26th, 2009 11:01 AM by Michael Barrow

 

I haven't written in a few weeks, so I'm a bit behind in my reporting, but there have been a few big pieces of news that I want to make sure I get everybody caught up on in the next few days.

I'll start with a biggie...Drum roll please...Wait for it...First-time home buyers are you listening? It's an $8,000 tax credit for first-time home buyers!!! And this time around it is a true tax credit, meaning you don't have to pay it back. This is huge!

So here's how it works. If you are a first-time buyer, meaning you haven't owned a home in the last 3 years, and you buy a primary residence (which means you will live in the property) between January 1st, 2009 and December 1st, 2009 you will be eligible for an $8,000 credit on your taxes.

The big thing with this tax credit is that it is fully refundable. This means that first-time home buyers who owe less than $8,000 in taxes for the year are still eligible for the full $8,000 credit when they file their tax returns, and the IRS will write them a check for the difference between $8,000 and their actual tax bill. Not only that, but if you're getting killed on your 2008 tax returns because you didn't own a home you can apply this credit to your 2008 taxes, as long as you purchase the home before you file on April 15Th.

There are a couple of restrictions on the credit. First, you must live in the home for at least 3 years, so no house flippers. And there are income limitations to claim the full credit ($75,000 for single tax-filers and $150,000 for married couples).

So, if you are a first-time home buyer who has been sitting on the fence, now is the time to get off and start shopping. You can search the San Diego MLS on our website.

One more quick update to my last post "Another bail-out is taking shape...but, what's in it for me?" The conforming loan limits from last year were re-instated. This is more big news for San Diego as the limits moved from their reduced limit of $625,000, back up to $729,750! Unfortunatly these limits are not permanent, and will expire on December 31st, 2009.

In my next post I will be attempting to dissect the Obama administration's Foreclosure Prevention Plan (that one's a bit more complicated and all the details have still yet to come out), so check back soon.

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