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Under the new housing bill that gives first time home buyers a tax credit, first time home buyers will be eligible for a tax credit for up to 10% of the property up to a maximum of $7,500.  In order to qualify a buyer can not have owned a home in the last 3 years.

Here’s how the new first time buyers tax credit works…

• Married couples who file separately will each get a credit of $3,750, and unmarried couples who file jointly can divide the $7,500 credit between them.

• This program is actually a loan that must be paid back over the next 15 years at 0% interest, in the second year of home ownership.  A 1st time home buyer who qualified for the whole credit would pay $500 for 15 years or about $41.67 per month.

• The credit will only apply to homes bought after April 9,2008 and before July 1, 2009.

• High-income home buyers dont qualify: Eligibility begins phasing out for single filers with adjusted income of more than $75,000 and $150,000 for joint filers. It completely phases out at $95,000 for singles and $170,000 for married couples filing jointly.

While having to pay back the credit over time seems like it dilutes the benefit, many homeowners will  enjoy the benefits of a higher tax return. I’m sure the money can be put to good use for home improvements and some of the higher cost home purchases such as appliances and furniture.

Under the new FHA guidelines it just got a little tougher for 1st time buyers to purchase their first home with an FHA loan, but hopefully this new bill will help soften the blow.

Just to be clear, it’s not a credit you have to take if you meet the criteria, but just know that it is available to you. 

It’s still a great time to buy a house!  If you are in the market to buy or sell a home, or know someone who is, it would be my pleasure to help you with all of your home buying or selling needs in the Plainfield or Naperville area.  Call me at 630-673-6233.