In today’s housing market, homes prices are at a historic low, as are mortgage rates. For those who have been saving money and waiting to buy a home, there are a number of really great deals available. This includes, of course foreclosures, of which there are literally thousands and thousands across the United States, but even new home builders have been feeling the crunch, so getting a great deal on a home is possible.
In addition to these incentives, the government is also offering an incentive of its own to help make buying a home easier and less expensive for new home buyers. This incentive comes in the form of a tax credit for first time home buyers, which can cover up to 10% of the homes cost, with a limit set at $8,000.
When figuring the amount of the tax credit, the lesser of the two values is used, so for a $60,000 home, only $6,000 would be received as part of the first time home buyers tax credit. For a $150,000 home, only $8,000 would be provided.
This is not the first time the government has offered an incentive to those who have purchased a home, as they have previously offered a no-interest loan. However, the current tax credit for new home owners is different in that it does not need to be paid back. Instead, the tax credit, with its $8,000 limit, comes in the form of a check that can be used by the homeowner to help cover the cost repairs, bills, or anything else that the homeowner needs.
The first time home buyers tax credit, which is often referred to as Obamas Tax Credit or Obamas First Time Home Buyers Tax Credit, is available to those who have purchased a home during 2009, specifically between January 01, 2009 and December 01, 2009.
The home can be a traditional single family home, a modular home, a manufactured home, and even a house boat. Mobile homes and new construction are also covered by the Obama housing tax credit.
There are several other provisions to the First Time Buyers Tax Credit, most notably that the home owners must not have owned another primary residence over the last three years. For those that are married, this stipulation applies to both spouses.
An income cap is also set, with those who make more than $75,000, or $150,000 for married couples, not being able to receive the full $8,000, although a partial tax credit may be available.
The major difference between this and other stimulus plans, such as the 2008 First Time Hombuyer Credit, is that the tax credit will not need to be repaid by the home owner. Instead, it comes in the form of a check and can be applied for when you file your 2009 tax return in April. It is necessary to include a Form 5405, with your standard tax return.
However, it is not necessary to wait until April and it is also possible to file an amended tax return. Simply follow the instructions to amend your 2008 tax return, including the IRS Tax Form 5405, and it is possible to receive the Obama Housing Credit within 8 weeks.
It is also possible to change the number of dependents you claim at work, so that less money is taken from your paycheck every month. However, if you decide to go this route, make sure you are 100% certain you are eligible to receive the Obama Tax Credit, because otherwise you will end up owing the IRS money at the end of the year. It is also a good idea to calculate how much you have received, so you do not exceed the $8,000 first time home owners tax credit.
It is important to note, that the funds of Obamas Housing Credit will be applied to any money you owe the IRS first, with the balance returned to the homeowner. However, those who do not owe any taxes, even those who do not have any actual income, will receive the full $8,000 tax credit.
Today, there are many incentives to purchase a new home, namely historically low interest rates and a surplus in empty homes, which has reduced the overall cost of a new home. Together, these incentives can make it much more affordable to own a new home and it is possible to end up paying much less than you would in rent. The government is also currently offering an incentive for first time home buyers in the form of a tax credit of up to $8,000 towards the purchase price of the home. While this tax credit can be applied to either your 2008 or 2009 tax return, it is probably in your best interest to file an amended 2008 tax return, so the first time home buyers credit can be received sooner rather than later.
The 2009 First Time Home Buyers Tax Credit is part of the American Recovery and Reinvestment Act, which is designed to help stimulate the economy. President Obama signed this bill into law in February and it includes a number of tax incentives for both consumers and corporations. All told, the American Recovery and Reinvestment Act includes $288 Billion in tax relief, which represents about a third of the American Recovery and Reinvestment Act’s budget.
Of the $288 Billion in tax relief, $6.6 Billion has been set aside for first time home buyers. There are several requirements to receive the first time home buyers credit, including that the individual has not owned a home in the last three years and that their income is less than $75,000. For those that meet the requirements up to $8,000 is offered in the form of a tax credit that does not need to be repaid.
Obama’s First Time Homebuyers tax credit can be claimed on either ones 2008 or 2009 tax return, but rather than waiting, it is generally in your best interest to file an amended tax return, so that the funds can be received right away. Filing an amended tax return is very easy and it is only necessary to resubmit a 1040X IRS Form and include a form 5405, which is required as part of the First Time Home Buyers Tax Credit. After the amended tax return has been submitted and received by the IRS, it usually takes between 8 and 12 weeks to process.
By filing an amended tax return, it is possible to get your stimulus check much quicker than if you were to wait until 2009. This means you get the money right away and can reinvest it in your home, simultaneously increasing equity and reducing mortgage rates. It can also be spent on home improvements or to help with bills.
Those that decide to file for the 2009 First Time Homebuyers tax credit return on their 2009 taxes will have to wait much longer to receive their stimulus check. It also could mean that the budget could be expended, which has already happened with the Cash for Clunkers incentive program. However, in order for the first time Homebuyers tax credit’s budget to be expended, 825,000 people would have to submit an application.
While it is possible to file an amended tax return to receive your funds right away, it is also possible to change your number of deductions, so that you pay less, or even nothing, towards your federal taxes in your paychecks. At the end of the year, the First Time Home Buyers Tax Credit will be applied to what you owe to the IRS and the difference will be refunded.