With the home market slowing down in the wake of recent mortgage lender failures, the government has been contemplating different ways to jump-start the purchase of new homes, especially trying to attract first-time home owners. One method the government is initiating is a tax credit program for all first-time home buyers that make a home purchase before December 31st, 2009.
Recently approved by Congress, anyone eligible that buys a house in any condition for any price will have up to $8000 less to pay the government in taxes at the end of the year. If you are an eligible home buyer this year that owes around $5000 in taxes, you would claim this credit, save $5000 in taxes, and receive a refund of the $2500 remainder.
The eligibility for this program encompasses anyone buying a home before the above date who has never owned a home or has not owned a home within the past three years. Once the buyer seals the deal on the home purchase, they can claim the credit on their income taxes of up to 10% of the purchase price, at a maximum of $8000.
Although the amount of the tax credit you take will eventually have to be paid back to the government, it can be paid back over a period of up to 15 years and does not accrue interest, basically serving as an interest free loan.
Norfolk, VA real estate agents have began using this incentive program while pushing local homes to prospective first time buyers. Norfolk real estate companies, like Chandler Realty, see the program as beneficial to both sellers and new home owners alike, improving the chances people will look to buy a home instead of rent.
To research more on this tax credit, visit the Federal Housing Tax Credit site.