Hands On The Heartland
Checking The Pulse Of The Kansas City Real Estate Market 

The $7,500 tax credit introduced in 2008 and designed to stimulate home buyers is still in effect but the opportunity to use the tax credit is set to come to an end on 7/1/09. So home buyers wanting to reap the benefits of the tax credit will need to hit the home search trail hard this spring.

The tax credit essentially operates as an interest-free loan and buyers shouldn’t misinterpret the credit as the government simply handing out $7,500 in free money. The tax credit benefit also isn’t realized at the closing but rather at tax time. The home buyer does get a true dollar for dollar credit – meaning a person owing $10,000 in taxes (and who took the full $7,500 credit) would instead owe just $2,500 in taxes. The buyer has to pay the tax credit amount back but gets to do so over 15 years at zero percent interest. $7,500 is the maximum tax credit and to get the full grant amount the buyer must purchase at least a $75,000 home. The credit is figured at a rate of 10% of the sales price thus a $50,000 home would net a $5,000 tax credit.  

The tax credit only applies to first time home buyers or buyers who have not owned a home in the previous three years. Buyers who make more than $90,000 a year in adjusted gross income (or $170,000 for couples filing jointly) do not qualify.  If you’re considering use of the $7,500 tax credit be sure to contact a Certified Public Accountant to discuss the tax ramifications of any real estate decision you are considering. You can also learn more here at the IRS Tax Credit To Aid First-Time Homebuyers or here at the National Association Of Home Builders.

Posted by Jason A. Brown

Comments Can Be Left Below…
Don’t see the LEAVE A COMMENT section below? 
Click on the headline at the top of this blog post.