There are many great reasons to buy a home in Denver, but the recent stimulus bill has just given homebuyers 8,000 more reasons to act now. In the new stimulus bill signed by President Barack Obama on February 16, 2008, first time homebuyers can claim up to $8,000 or up to 10% of the value of the home as a tax credit. The hope is that potential buyers who are deliberating whether to buy now or wait for possible future declines in housing prices will take the plunge.
The amount is less than the $15,000 originally proposed, but unlike the "$7,500 tax credit" offered last year, at least the terminology is right. Last year's credit was actually a "no interest loan" over 15 years. The $8,000 is a real credit which does not have to be repaid. As was the case with the old credit, taxpayers who owe less taxes than the credit will receive a check for the difference from the government.
The money is not intended to help new buyers out with the down payment, but a chunk of money in hand (or less withholding each paycheck) will be a great benefit to new homeowners. For many moving from rental property, the funds will be helpful in offsetting the new costs they find themselves faced with that they may not have had to pay as renters, such as heating bills, homeowners' insurance, or landscaping. The new house payment is usually more than the rent, so the credit dollars will help them transition the higher payment into their monthly budget. People often need new appliances, new window treatments, and maybe even new furniture for their new home; having a few extra dollars available for these things will alleviate the temptation to run up the credit cards.
Aside from the no payback provision, how does the new credit differ from the old? The provisions are compared in this handy chart:
|
|
2008 Plan |
2009 Plan |
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Effective Dates: |
4/9/08 - 7/1/09 |
1/1/09 - 12/1/09 |
|
Amount of Credit: |
10% of home cost up to $7,500 |
10% of home cost up to $8,000 |
|
Eligible Property |
Any single family primary residence |
No change |
|
Refundable |
Yes. Reduces or eliminates tax liability in the year of purchase. Taxpayer receives any unused credit. |
No change |
|
Income Limit |
Full credit if adjusted gross income does not exceed $75,000 for individuals or $150,000 for couples. Reduced credits for AGIs up to $95,000 individual or $170,000 for couples. |
No change |
|
Who is a First Time Homebuyer? |
Purchaser (and spouse) who has not owned a home within the last three years |
No change |
|
Revenue Bond Financing |
No credit allowed if home financed with state/local revenue bonds |
Credit allowed if home financed with state/local revenue bonds |
|
Repayment |
Yes, over 15 years with annual payments of 6.67% of credit |
No repayment! |
|
Recapture |
If home is sold within 15 years, remaining balance to be repaid will be deducted at sale |
If home is sold within 3 years, entire credit will be deducted at sale |
As is true of other measures enacted lately to solve the housing crisis, the tax credit is intended to help people acquire - or in the case of anti-foreclosure legislation, keep - their primary residence. Vacation homes or investment properties do not qualify.
With an inventory of affordable Denver homes within reach, and interest rates near historic lows, now is the time for qualified Denver home buyers to contact us at Bandy Homes to take advantage of this new credit.
Marianne Bandy
Beautiful Aurora Homes
