I previously wrote about the $7,500 tax credit available for first time home buyers (no home ownership in previous 3 years). This is a reminder that you must purchase a home by July 1, 2009 to qualify.
The credit must be repaid over 15 years, starting two years after the credit is claimed. Keep in mind that this is an interest free loan. More details are available at this FAQ page.
One potential new home buyer I talked to was not interested in the credit because of the requirement to pay it back over 15 years. The buyer would rather save up money and not have the payments.
If you are concerned about spending it and not having the money to make payments, then at least consider putting the credit or the tax obligation you would otherwise have paid into an interest bearing account. You can receive interest on the credit while paying off the loan. You actually make money. Of course, you have to have the discipline to not touch the principle amount except to make the annual payments.
You should consult with your tax or financial adviser to be sure you can qualify, and to review the best use of any tax credit you may receive.
Update 2/5/09: The Senate is reviewing a stimulus bill that includes increasing the credit to a maxium of $15,000, extends the deadline for purchase to Dec. 31st, and changes the repayment requirements, possibly not requiring repayment if the home is occupied more than 2 years. I’ll post an update once the bill becomes law.
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I didn’t know there was a time limit to the first time home buyer tax credit. I bought my first home through Taylor Morrison, and they were a great company to work with. (contest info removed – ed) I am planning on taking advantage of this credit, and I’m grateful to learn that there is a time restriction on it.
Thanks, Janice. Glad this info helped you. Just to be clear the time restriction is only for buying the home, and not filing your taxes for the credit. Once you buy the home within the required time frame, and meet all other requirements, you are eligible for the tax credit even after July 1st. Please check with a tax adviser for your situation.
And I hope you had a Realtor assist you with your new home purchase, and didn’t only rely on the builder’s representative. I’m sure they were very helpful when it came to getting the best deal for the builder
.