A tax credit of up to $8,000 is now available for qualified first-time home buyers purchasing a primary residence on or after January 1, 2009 and before December 1, 2009. Unlike the first tax credit enacted in 2008, the new credit does not have to be repaid. One thing is for sure, the enhanced tax credit is providing an excellent opportunity for new home buyers. It’s no secret that we are in a struggling economy and the government has been taking steps to try and revive it, especially the housing market which many say is the heart of the problems.
The American Recovery and Reinvestment Act of 2009 (The official name of the tax credit) has a few key components that home buyers should be aware of. Most importantly … it’s for first time home buyers and the credit does not have to be paid back. The credit is equal to 10% of the homes purchase price or a maximum of $8,000.00, and is available for any home bought on or after January 1, 2009 and before December 1, 2009. Single taxpayers with an annual income up to $75,000 and married couples with an income up to $150,000.00 can receive the tax break.
So with all this talk about first time home buyers lets be sure that you understand exactly what the government defines as a first time home buyer. The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the past three-year period prior to the new home purchase. In addition for married couples, the law looks at both parties individually but it affects the couple as one. In other words, if you have not owned a property in the past three years but your spouse has owned a principal residence, neither you or your spouse qualify for the tax credit.
However, the tax credit can work for unmarried joint purchases where one party can allocate the credit amount to any buyer who qualifies as a first time buyer. So a parent may jointly purchase a home with a son or daughter allowing the child to get the tax credit. In addition, ownership of vacation or rental properties that are not used as primary residence do still qualify as first time home buyers for the tax credit.
Now let’s take a closer look at the income limits and what all the small legal print exactly means. It’s funny as I sit here and type this, a phrase that a good friend says popped into my head. He would always say “Check the fine print, because what the good Lord giveth the fine print take away”. Now what the income limits state specifically is that the tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) more than $75,000 for single buyers and $150,000 for married couples who file joint tax returns. If an individual makes greater than $95,000 or a couple makes greater than $170,000.00 then the tax credit is reduced to zero. For individuals and couples who’s MAGI falls in between these ranges the tax credit is reduced proportionally.
If you're like most Americans, owning your own home is a major part of the American dream. The Fannie Mae Foundation wants to help you understand the steps you have to follow to reach that dream. Homeownership is a big responsibility, one that you will need to accept for many years to come. It's worth the effort, and the Fannie Mae Foundation can help.
You may not be familiar with us. We were formed and funded by Fannie Mae, which is a private company chartered by Congress to provide funds to local lenders for home mortgages in communities across America.
The Fannie Mae Foundation is a nonprofit organization. Among other activities, the Foundation provides information useful to Americans who want to buy a home. We know that the whole process of getting a mortgage can be confusing, so an important service we provide is information such as this guide.
It was supposed to be a momentous occasion for Brian, who was about to close on his first home.
But after signing a thick stack of documents--and taking part in the ceremonious passing of the
keys--something felt off for the then 26-year-old Montgomery County, Md., resident. There
wasn't even a chilled bottle of bubbly or a housewarming gift to punctuate this pivotal moment. "My Realtor told me that I can take him out for a steak," recalls Brian, who prefers that only his
first name be used to guard his privacy. "He made me feel like I owe him something, when he
just got paid a $12,000 commission. It felt like a kick in the face."
On behalf of the Michigan Mortgage Lenders Association (MMLA) Consumer Education Committee, we would like to take a moment to thank you for spending time with us and learning more about the home-buying process. We are committed and dedicated to the real estate finance profession and want to make a positive impact on the lives of as many residents as possible in the state of Michigan. We hope that you find the content of this Consumer Guide to be helpful as you begin the process of becoming a homeowner.
Please keep this consumer Guide in a safe and convenient location where you can reference it in the future for information, or pass it along to others you know who might be interested in learning more about the home-buying process.
1. Work only with a nonprofit, HUD-approved counselor.
2. Don't pay an arm and a leg.
3. Be wary of "guarantees."
4. Know what you are signing--and be sure you sign it.
This user-friendly booklet is designed to provide congregants and the public with critical and helpful information on how to keep their home. The booklet will consist of a list of government-based agencies and private lenders that can assist at risk borrowers.
This step-by-step guide will also help them to identify resources in the housing industry that have been created for the explicit purpose of assisting homeowners who are touched by the current difficulties. The booklet contains websites, phone numbers, lists of individuals and institutions that can help borrowers navigate through this housing turbulence.
Order this booklet for the residents of your state, county or city now!
Call 1-202-744-0184
