First Time Home Buyer Credit - It's Not Too Late

Since the Housing and Economic Recovery Act of 2008 was enacted, first home buyers have had the opportunity to take advantage of a tax credit (provided that they meet a set of requirements). Fortunately it’s not too late to benefit from this opportunity; however, for those who only just got started in their Greater Raleigh home search, you should be aware of the steps that need to be taken by November 30, 2009.

The Deadline is Quickly Approaching

Now that the deadline is only a handful of weeks away, obtaining the first home buyer tax credit can be tricky as it adds another restriction to the already complex process of purchasing a first property. November 30th, 2009 is the time limit for a real estate purchase to qualify for a tax credit, which means that the deal has to be closed and finalized by then.

Several weeks may seem like a long time in theory, but in an endeavor that includes house hunting, securing a loan, negotiating and inspecting, the aspiring homeowner will in most cases have their hands full already and can easily lose track of time. Therefore, it’s important to understand that, in order to apply for the tax credit, a firm deadline near the end of this year has to be met.

Understanding the Timeframe and Restraints

Even though it sounds very appealing - with a maximum cash credit of $8,000 - this initiative is truly targeted at a specific group of people: first time home buyers who intend to establish residence on a long-term basis. There are a few restrictions that come with the tax credit, and here are a few important ones:

• A person who has previously owned property (even abroad) in the past three years is not eligible.
• The buyer must intend to live in the property for at three years, failing which, the tax credit could be reversed. However, renting part of the house is an option.
• Persons making over $90,000, or $170,000 for a married couple, a year will not qualify for the credit.
• Persons making between $75K-$90K, or $150K-$170k for married couples, bracket will be in the “phase out” zone, which means that their credit will be reduced based on their total income.
• The house can’t be purchased from a close relative.

Overall, the first time home buyer tax credit is still a great opportunity, and has been designed specifically to help people looking to buy a home for the first time. Other buyers, including real estate investors probably won’t be able to benefit from it.

Claiming the Credit

This part is – perhaps surprisingly – not the most complicated at all. The credit is simply obtained by filing it along with a 2009 tax return. Important to note is also that, even though the purchase will take place in 2009, the taxpayer could be able to file it as part as either their 2009 or 2008 tax returns (by filing an amendment).

Take Advantage

November 30th, the deadline, is near. Of course it doesn’t mean rushing through something as important as the purchase of a Raleigh NC home would be advisable, but this opportunity, coupled with a generally buyer-friendly market, could be the deciding factor for those hesitating to go ahead and make their first home acquisition this year.

Questions

Overall, should you have any questions regarding the first time home buyer tax credit, please contact a member of the Greater Raleigh Realty Team – we’re here to help.

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