Tuesday, December 30, 2008

Questions Regarding the $7500 tax credit

The inventory of Las Vegas homes for sale is finally starting to dwindle just a bit, bringing hope for 2009 that our Las Vegas real estate market is starting to show real signs of recovery. But we have found that many buyers who would like to purchase are unaware of the tax credit they may be eligible for if they have not owned a primary residence in the past three years or if they are a first time homebuyer. So we found this great article by Brad Lynn explaining in simple terms who can claim the tax credit in hopes that our readers will find this helpful. If you are a little short in saving for down payment money on one of the great Las Vegas foreclosures deals we have available, this could be your answer.

Information courtesy of Brad Lynn
First Option Mortgage in Las Vegas

Congress created the $7500 tax credit incentive to help first time home buyers get into a home and stimulate the housing market and economy. Their rationale is that it will help stabilize home prices and increase home sales.

First time home buyers purchasing a home between April 9, 2008 and before July 1, 2009 are eligible for the 7500 tax credit. The home must be used as a principal residence and be occupied within this time frame. For newly constructed homes, the settlement date is used instead of the date the home is occupied.

A first-time home buyer is any buyer who has not owned a principal residence, i.e. single family home, condo, townhouse, mobile home, houseboat, during the three years prior to the home purchase. Thus, even people who have bought a house before may still qualify for the tax credit.

An important caveat for married couples regarding the 7500 tax credit is that if any spouse has owned a home as a primary residence in the past three years, then neither spouse may qualify for the first-time home buyer tax credit. Ownership of non-primary residences such as rental properties or vacation homes does not disqualify a first-time home buyer from the $7500 tax credit. All you have to do is claim the tax credit on your federal income tax return. It’s that easy.

There are a few restrictions regarding the 7500 tax credit you should know about. First, the tax credit may not be available or only partially available based on your Adjusted Gross Income (AGI), and this varies for single vs. married couples. The tax credit is completely unavailable to single people with an AGI greater than $95,000 or married people filing jointly with more than $170,000 in AGI. The credit is evenly split for married couples filing seperately, i.e. each spouse can only claim $3,750.

Second, the 7500 tax credit is limited to 10% of the purchase price of the home and capped at $7,500. So as long as the home price is greater than $75,000, most people can get the full credit.

Also, the tax credit is basically a zero interest loan as it will eventually have to be paid back to the government (without interest), over a 15 year period or when the home is sold. The first payment is not until 2 years after the credit is claimed. The payments are generally calculated as the credit amount divided by 15. Thus, a 7500 tax credit would be paid back at $500 per year for 15 years or when the home is sold, which ever comes first. If the home is sold and there is not enough capital gain to payback the remaining portion of the tax credit, then the debt may be forgiven.

To find the best Las Vegas homes on the market and take advantage of the terrific prices we now have, please call us at 702-985-7654. Don't forget, you only have until July 1st to take advantage of the tax credit.

Post a Comment