Economic stimulus includes $8k first time homebuyer tax credit
The House and Senate have agreed on the economic stimulus bill and the President will be signing it into law on Tuesday in Denver. The economic stimulus bill does include an $8k first time homebuyer tax credit. The most important change from the prior first time homebuyer tax credit is that this is a real tax credit and not a 15 year no interest loan. This tax credit does not have to be repaid.
Here are the highlights.
A tax credit of 10% of the value of a home up to $8k is available for first time homebuyers.
First time homebuyers are defined as anyone who has not owned a home in the past 3 years.
The tax credit does not have to be repaid.
The tax credit will apply to the purchase of a primary residence.
Purchase date is the date you move into the house and must be between January 1, 2009 and December 1, 2009.
You must live in the home for 36 months.
The value of the tax credit will be reduced or eliminated for high income taxpayers.
While not as large as the $15k tax credit available for all homebuyers that was passed in the original Senate version, this is both good news for qualifying buyers and the Charleston real estate market this year.
The tax credit cannot be used for your down payment and as always, my recommendation to consult with your accountant or financial advisor. Then give me a call and we'll start house hunting.
UPDATE: The Charleston MLS has prepared a clear and easy to understand table explaining the provisions of the tax credit. Click here
UPDATE: FHA will allow the $8000 tax credit to be used as a down payment. The official announcement from HUD is expected to be made during the week of May 18th. Learn more.
IMPORTANT UPDATE: Not so fast. The official announcement and details have not been announced by HUD yet. Lots of contradictory information is currently blazing around the Internet at the speed of well, the Internet.
EVEN MORE IMPORTANT UPDATE: Details have been announced. If you use a FHA loan, the tax credit can be applied toward closing costs and a portion of your down payment but not the first 3.5 percent. Here is a very easy to understand article by Luke Mullins at US News and World Report.