Getting a Tax Credit For Buying Your First Home

Aside from the big money involved in buying a house property, the other thing that holds people back from purchasing a house is the humongous tax that comes with it. With the fickleness of the current economic situation, people are more likely to hold on to their money instead of investing them on real estate properties.

However, it is actually a good time to buy a house property nowadays because prices of house properties are generally going down. Plus, banks and other financing institutions are offering lower mortgage interest rates compared to the past years. Despite these advantages, a lot are still hesitant to purchase a house of their own because aside from the maintenance expenses they need to deal with, there is also the property tax, which can increase their annual tax payments.

To help both the economy and the people who wish to get a house of their own, Congress approved the American Recovery and Reinvestment Act of 2009. This is commonly known as First-Time Home Buyer Tax Credit. If you have not bought a property of your own ever since or for the last three years, you can take advantage of the First-Time Home Buyer Tax Credit.

The 2008 and 2009 first-time home buyer tax credit have the same goal, which is to lower the taxpayer’s tax payable or increase his or her refund. Both 2008 and 2009 are also fully refundable which means taxpayers will get a refund if their tax is less than the credit amount or if they do not have any tax payable amount.

But it is better to take advantage of the first-time home buyer tax credit of 2009 because the amount is bigger compared to 2008. The 2008 credit aid was only up to $7500. Plus, the 2009 credit act is a true tax credit. Unlike with the 2008 act that was more like a zero-percent interest loan where buyers need to repay it in 15 years, the 2009 tax credit works like an advanced payment to your annual tax. Once the $8,000 credit is deducted from your annual tax, you can expect a significantly lower tax to pay at the end of the year.

The $8,000 credit is definitely a big incentive to have. One of the things that can hold back the people from buying a house is the upfront cost – the earnest money, down payment, and closing costs. The tax credit can already cover these costs, depending on the price of the house you will get. You can also use the credit for processing other necessary housing documents. Or, you can use the tax credit to pay for the moving costs or the new furnishings you need for your newly purchased house.

To qualify for the 2009 tax credit, your financial income must meet certain criteria. For single individuals, your annual income should not be more than $75,000. For married couples, the joint annual income must not exceed P150,000. For the higher income taxpayers, do not be sad as you can still enjoy this though credit amount will be lowered.

It is high time to buy a house now. Aside from realizing your dream house, you are also helping the economy move up.

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