New Housing Law Offers Relief, Benefits to Home Buyers

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This morning, President Bush signed into law the Housing and Economic Recovery Act of 2008, legislation aimed at shoring up the housing market in the United States and offering current homeowners with troubled mortgages and potential homeowners with significant assistance.

Of most interest to people who do not own a home but have been thinking about it is a $7,500 tax credit to qualified first-time home buyers who purchase a home between April 9, 2008, and June 30, 2009. That’s a tax credit, meaning those who qualify will receive a dollar-for-dollar reduction in what they owe the year the credit is taken against their income taxes. The credit does have to be repaid, but it is done over 15 years and payments don’t start until tax returns files two years after the credit is taken.

In the Memphis-area market first-time buyers make up a larger share of all buyers than the national average, which means a larger number of people locally stand to benefit from the credit. Add to that the affordability of Memphis-area real estate and it adds up to an outstanding opportunity for first-time buyers.

Here’s the fine print:

  • The credit amount can be 10 percent of the cost of the home purchased, not to exceed $7,500.
  • Any single-family property (including condos) that will be used as a primary residence is eligible.
  • The full amount of the credit is available for individuals with adjusted gross income of no more than $75,000 ($150,000 for joint filers). The amount of credit available gradually phases out as adjusted gross income reaches $95,000 for a single filer and $170,000 for joint filers.
  • The credit is repayable over 15 years (without interest) in equal installments of 6.67% of the credit or when the owners sell the home, assuming there is sufficient capital gain from the sale. Repayment does not begin until two years after the credit is claimed.

More detailed information on the tax credit, including FAQs and answers, is available at this site created by the National Association of Home Builders.

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Posted by Scott Sherrin at 12:49 pm

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