$8,000 First-time Homebuyer Refundable Tax Credit

 If you’ve been reading here long, you might guess that I am no fan of social programs.  However, I am a fan of taking advantage of opportunities as they are provided… provided your use of such  offerings is moving you in a positive direction.  A personal example I’ll share related to Obama’s spending plan or stimulus attempt back in the first of the year. 

Part of this program allowed for the government sudsidy of COBRA payments and as I was between jobs at the time, a 60+% reduction in our monthly insurance payments was a nice benefit.  To have refused would have been foolish… it was offered, it was legal, it was helpful.

Similarly, the tax credit offered to first time home buyers is a unique opportunity for those who both qualify for the program and who can actually afford to purchase a new home.  Prices are low and rates are low and a home is a fantastic investment over the long haul.  It is not the right time for everyone, but for some it is a great time.

For this reason, I want to pass along some information about this program.  Enjoy!

If you have been waiting to take advantage of the low mortgage rates currently available, now may be the time. The economic stimulus package currently being pushed by the Obama administration includes an $8,000 first-time homebuyer refundable tax credit for qualifying buyers who purchase a home between Jan. 1, 2009 and Nov. 30, 2009.

Homebuyers cannot have owned a primary home within the past three years in order to qualify as a first-time buyer and you must make less than $75,000 if single, $150,000 if married. The house that you purchase must also serve as your primary residence for at least 36 months or you will be obligated to pay back the credit. Applying for the credit is very easy- all you have to do is claim it on your tax return and no additional papers or forms are necessary. You don’t have to wait until the 2009 tax season comes around in order to get your $8,000 credit. Once you complete the purchase of your home you can get it sooner by filing an amended 2008 return.

Time is beginning to run out (the deadline is November 30th) and whether congress will extend the credit is still very much up in the air. The program so far has had a tremendous impact on new home sales and housing prices throughout the country as evident in the latest Case-Shiller index. The index showed the first increase in national home prices in three years with the National Home Price Index rising 1.4%. It will be interesting to see what direction housing prices will take in the months ahead, especially if congress decides to extend the program.

Thanks for readng along.  I hope you’re take  minute to leave me a comment below or click over to the site (if you’re reading from email) and let me know what you think of this content as compared to my typical materials.

Category: Personal Finance

6 thoughts on “$8,000 First-time Homebuyer Refundable Tax Credit

  1. I share your general opinion that social programs are usually wasteful and ineffective, particularly economic initiatives like the “stimulus” package. However, I think this home buyer tax credit is an example of a government program that can be helpful and actually useful in meeting the stated goals (prop up the real estate market). If the entire $800+ billion dollar stimulus was applied to actual infrastructure projects and programs like this, I think our economy would turn around much more quickly.
    .-= Dustin | Engaged Marriage´s last blog ..Have You Tried a Marriage Retreat? =-.

    • Dave Ozment on said:

      I agree… when social programs are used, we should seek out those with the best opportunity to sustain growth beyond simply the tax dollars plugged into the program.

      Thanks for commenting Dustin!
      Dave

    • I think another example of a good program is Cash for Clunkers. It was a success since it was gone and implemented quickly. Although, others say that it would hurt more in the long-run for a variety of reasons:

      - All the program did was advance consumers’ purchase of new cars.
      - The program effectively stole some value from the used car industry
      - there was a slowdown in other purchase in the long run
      - etc…

      Im not an economist so I don’t know if these have some basis. Let’s just wait for the data to come in after a few months to see the real score. But what do you guys think of the program?

      • Dave Ozment on said:

        Hey Samuel, thanks for commenting. I have to say that I think the cash for clunkers deal was a horribe idea. I recently listened to an interview with a long time car dealer and industry watcher and he was already observing the effect of your first bullet. He was quoting monthly sales trends and how they spiked and dipped since the clunker program. I also dislike it for it’s flawed environmental reasoning. The “clunkers” were often good cars that now must be destroyed. A solvent is poured into the oil pan and the car is run until the engine seizes… then the cars must be destroyed. I say let nature run its course, those cars will be replaced overtime without having to be destroyed.

        There are many other reasons I dislike the program but those are a couple.

        But that’s not to discourage your participation. I hope to have you engage the discussion again soon.

        Thanks,
        Dave

  2. Lisa on said:

    Hi really enjoyed reading your article and was wondering What is good financial planning software that can be used in confuction with dave ramsey plan (microsoft money?

    • Dave Ozment on said:

      Thanks Lisa. You know, I just use excel spreadsheets. I have links to the exact versions that I’ve used for years on this site. Just hit up “Free Budget Tools” for the links and downloads.

      Dave

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