Good News for First Time Buyers

First time buyers hold all the cards in a negotiation in this down market.

By: Melanie Wilson

Thanks for the American Housing Rescue and Foreclosure Prevention Act first time buyers are finding that the housing market is just right for them. Passed in July 2008 the Act provides first time buyers with an incentive for purchasing. How much of an incentive? $7500. If the home is priced less than $75,000 the credit given is up tot 10 percent of the purchase price. Homes eligible for the credit must be purchased between April 8, 2008 and July 1, 2009.

The incentive is another attempt by the US government to help the housing market in the US. There are both negative and positive aspects to the credit. Those who take advantage of the incentive must repay the money but they have fifteen years to do so. Split that up and it’s only $500 to pay back to the government each year. Bob Trinz, senior tax analyst at Thomson Reuters points out that the incentive is “the equivalent of an interest free loan from the government”. The positive aspect of the credit is that it reduces the buyer’s tax liability. Some who receive the incentive will actually receive a higher tax return than they would have without the incentive.

In order to receive the full amount of the incentive the buyer must fall within the parameters established by the American Housing and Rescue Act of 2008. Buyers must not have been the owner of a home within the last three years and have an adjusted gross income of less than $75,000 if filing single. Those filing a joint return can have an adjusted gross income up to $150,000.