Mount Pleasant

The $8,000 First-Time Home Buyer Tax Credit included in President Barack Obama economic stimulus package is just one of several reasons to buy in today’s market.  With interest rates below 5%, low average sold prices, high inventory and an abundance of foreclosures and short sales in all price ranges AND a tax credit that does not have to be repaid make it the ULTIMATE BUYER’S MARKET.

I think it’s important to understand that while this tax credit is termed “First-Time Home Buyer,” it does not mean that in order to qualify you literally must be buying your very first home.  And yes, if you are currently renting and have never owned a home, you are in a great position to buy right now.  However, for the tax credit program, the IRS defines a first-time home buyer as a buyer who has not owned a principal residence during the three-year period prior to the purchase.  So that means if you’ve owned a vacation home or rental property – but not a principal residence – within the past three years, you would still qualify for the credit.  It also means that, let’s say you’re a parent who jointly purchases a home with a son or daughter, you may allocate the credit amount to them (providing of course they qualify as a first-time buyer).  Also keep in mind that if you and your spouse owned a home while married and you have been divorced and not owned a principal residence for three years, then you qualify.

Of course, there are other key points you need to know about the $8,000 first-time home buyer tax credit and I definitely recommend you see your tax professional for full details about qualification.  Click here to visit a site by the National Association of Home Builders that provides a clear definition of how the tax credit works.  Tax Credit At A Glance and Frequently Asked Questions are particularly informative.  There are income limits, and because the credit is “refundable,” qualified buyers can take advantage of it even if they don’t have much tax liability.  (This means that the home buyer credit can be claimed even if you have little or no federal income tax liability to offset.  Typically this involves the government sending you, the taxpayer, a check for a portion or even all the amount of the refundable tax credit.)  Another important thing to consider is buyers have to own the home for at least three years in order to capitalize on the credit.  If you sell the home before then, you will have to return the credit to the government, although there are exceptions to this such as death or divorce.

Recent statistics released by the National Association of Realtors show that over 500,000 Americans have already taken advantage of the tax credit and the IRS is expecting over 2 million to do so before the tax credit expires at the end of November.  So, if you’ve been thinking about buying, combine the $8,000 advantage, look at the interest rates, the selection and value of homes available and join the many “First-Time Buyers” taking advantage of this incredible opportunity.