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Florida Home Buyers First-Time Buyer Tax Credit:
A Reason to Buy Tampa or Orlando Homes Now
The homeownership tax credit that the federal
government created earlier this year is a hard-won tool at your disposal to
encourage your customers to jump off the fence and get into the home buying
market.
When you combine the tax credit with today’s
continuing low interest rates, large selection of for-sale inventory, and
low home prices, many of the pieces are in place for your customers to buy
now.
How the Tax Credit Works
The First-time Home Buyer Tax Credit was
passed this year as part of the Housing and Economic Recovery Act (H.R.
3221) on July 30 and targets any individual or household that hasn’t owned a
home for at least three years. Taxpayers can take the credit on their
2008 tax return if they bought their house this year after April 9.
It’s worth up to $7,500 and can be taken in a
single tax year. Authorization for the credit ends July 1, 2009.
The actual credit amount is set as a percentage
of the home purchase amount. That percentage amount is 10 percent, so
Florida home buyers can get 10 percent of the home price credited against
their tax liability, up to a maximum $7,500.
Income limits are $75,000 for individuals and
$150,000 for households. Individuals whose income exceeds the $75,000 limit
but isn’t more than $95,000 can still take the credit but on a reduced
basis. The same thing applies to households earning up to $170,000.
Any house is eligible as long as it’s a primary
residence.
Buyers Have 15 Years to Pay Back
To help keep the program cost effective for
taxpayers, the federal government requires the tax credit to be paid back in
small, 6.67-percent increments over 15 years. For that reason, some analysts
have likened the credit to a 15-year, interest-free loan to help make home
buying affordable.
There’s one restriction on the type of financing
that buyers can use if they plan to take the credit. That restriction is on
tax-exempt mortgage financing. That only applies if buyers are using
below-market interest-rate financing from a public agency or nonprofit
that’s funding the loan using proceeds from a tax-exempt mortgage-revenue
bond issue. For most buyers, this won’t be an issue. It’s mainly an issue
for low-income buyers using special mortgage financing.
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