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>>> This Program was replaced 01/01/2009 with the $8,000 Credit, but there is still good information here. <<<
*** This is a brief overview of how to get the money. There are several details you need to know before you actually do something. I even have a FAQ that I can share with you. But don't make decisions based solely on what you read here. You must call me before making any final decisions. ****
One of the biggest challenges to home ownership today is that the 3.5% minimum down payment on an FHA loan must come from the buyer in some fashion. There are no longer any seller funded resources, although there is still a bill before Congress that could bring back the Seller Funded DAP’s like AmeriDream, Nehemiah, etc.
One of the few good things that came out of the Housing and Economic Recovery Act of 2008 was the implementation of a Federal Tax Credit for First Time Home Buyers. This allows a qualified home buyer to receive a “credit” from the Federal Government for 10% of the purchase price, up to $7,500. This is a great resource for a first time buyer but still begs the question “I need it now so why can’t I have it now”?! Actually, there are two ways you can get the money now. Here is how you can do this:
- Go to your Payroll Dept. Tell them you qualify for this credit and want to temporarily suspend your Federal Tax withholding until you reach “x” amount (I wouldn’t go for the full $7,500, but you have to decide what the right number is for you). It’s your right to do this but not every company is going to cooperate. I would encourage you to be firm with your request to do this. However; if that does not work or you are not comfortable taking that approach, then try #2.
- Include the tax credit on your 12/31/2008 Federal Tax Returns as if you purchased the home in 2008. The law allows a tax payer to “elect” to treat a qualified home purchase in 2009 as if it occurred by 12/31/2008. Yes, you have to close first before you can file the tax return and include the home purchase. And yes, you will need an alternative resource for the money to close the purchase. Most likely, you will need to get a “loan or gift” from a family member and repay them when the Credit is received, but that makes it a quick repayment and family will usually help out when they know the timeframe for repayment is that short. The family member can even borrow the “loan or gift” money and that is not held against the buyer. Call me for details on how to structure this.
Of course, it is important for everyone to know that, as of today, the purchase MUST close no later than June 30, 2009 to be a “qualified” purchase. There currently is discussion about extending this Credit but, as of today, that has not occurred. More importantly, I am not a CPA and only a CPA or qualified tax preparer can officially dispense this advice. But, you now know two ways to help a prospective home buyer get the $7,500 tax credit NOW!
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