The new Federal Housing Tax Credit could be just the boost the housing market needs to get homes moving again. The real estate industry, sellers, and buyers can all benefit from this tax credit. The legislation allows first time home buyers a tax credit of as much as $7,500. Homes that are purchased and close between April 9, 2008, and July 1, 2009 are eligible for the tax credit. The homes can be new construction or they can be homes that have were previously owned.
This may seem like it would only benefit people who have never owned a home, but that is not the case. For the purposes of the legislation a first time home buyer is someone who has not owned a principle residence in the previous three years. For a married couple neither party could have owned a principle property in the previous three years. This means that if you owned a home at some point prior to the three year mark, but not since, then you are eligible for this credit. This broad definition will allow more people to be benefit from the housing tax credit.
Getting the tax credit is incredibly easy and will not cause the buying process to be extended in any way. All one has to do to receive the credit is claim the credit on your federal income tax return. There is no pre-approval process or additional applications or forms. However, it is advisable that buyers check to make sure they are eligible prior to purchasing the home.
If you are wondering how much of a tax credit your home will be eligible for, there is a simple calculation. The tax credit is equal to 10% of the purchase price but is capped at a maximum credit of $7500. If the purchase price of the house is less than $75,000, the credit will be less than $7500.
All of this means that the housing market is even more appealing to first time buyers. Mortgages are becoming a bit easier to access, housing prices are falling to record lows in most areas of the country and now the new tax credit is reducing the overall cost of homes as well. This makes it the perfect time to explore the local real estate market and make a purchase. The new incentives aren't permanent and quick action is needed to take advantage of them.
Julia Vakulenko is a licensed broker associate with Tampa4U.com Realty. She has one of the hardest working Tampa Real Estate team in Florida and also in2Va Team for Northern Virginia Real Estate .