The American Recovery and Reinvestment Act of 2009 authorizes a federal tax credit for up to $8000 when you purchase a home before December 1, 2009. Whether the buyer is a single person or a married couple, they qualify for the same amount. One exception to that is if the buyer is married and buying a home as an individual. In this case the individual only receives a $4000 tax credit.
Couples qualify for the tax credit if they have income of $150000 or less. A single individual has to have income of $75000 or less. If in either case their income is greater than the amounts shown, they get only a percentage of the $8000 tax credit.
There are other provisions in the Act to be aware of. You have to be a first time buyer. If you haven’t owned a home in three years, you qualify as a first time buyer. The amount of your credit depends on the price you pay for the home. The credit is 10% of the price up to $80000. If you purchase a home for $50000 you would receive a tax credit of $5000 not $8000. If you buy a home for more than $80000, you will only receive the $8000 tax credit and not 10% of the purchase price.
Some lenders are allowing you an opportunity to use the tax credit to help pay for closing costs or buy down the interest rate. A personal loan or bridge loan is set up at the beginning with the buyer using the tax credit to repay the borrowed funds.
There are many reasons to consider purchasing a home now. Contact your real estate agent to get good information on buying a Home before December 1st.
In spite of the real estate market’s decline over the past couple of years, a recent analysis of Federal Reserve data by the National Association of Realtors shows that homeownership is still a smart financial decision. For example, when comparing homeowner’s wealth to that of renter’s homeowner’s wealth exceeds by a 50 to 1 margin. The main difference is home equity.
For those who have owned their homes since 2003, home equity gains are the rule rather than the exception. Those in the Bay area of California who purchased five years ago average $105,000 in equity. The tougher Real Estate markets such as Detroit are facing negative equity. However, those who have owned their homes for more than five years have smaller negative equity.
In all 150 markets tracked by the National Association of Realtors, including the hard-hit markets, homeowners who’ve been in their homes for 10 to 20 years have enjoyed strong equity gains despite the decline in real estate. For example, in Detroit the equity for a 10-year owner is more than $10,000. For a 15 year homeowner the equity averages $60,000 and for 20 years it’s $78,000!
The data clearly shows that homeownership does pay and that it remains the largest store of wealth for the typical household. Homeownership provides growth in personal wealth in spite of difficult economic times.
Get practical suggestions for what is forex – welcome to your individual knowledge base.
