5 ways First-Time Home Buyers Could Miss Out on This Years Tax Credit

The 2009 First-Time Homebuyer’s Tax Credit passed by Congress this year just might be the best financial opportunity available to qualified home buyers in a generation. The new credit is retroactive to January 1, 2009. Unlike the 2008 package, this is not a loan. Eligible first-time buyers receive an $8,000 tax credit from Uncle Sam that does not need to be paid back.

Sweetening the pot, the law states that a first-time buyer is not necessarily a first-time buyer; the tax credit is available to any buyer who has not owned a home for the past three years. But the opportunity comes with some caveats. Here are five ways you could potentially miss out on this golden opportunity:

• Miss the buying deadline – The law states a home must be purchased between January 1 and November 30 of this year. But that means the transaction must close—not simply be in progress—before December 1.
• Delay on new construction – Because you must actually close on a home by November 30, 2009, you need to be careful about new construction estimates. If you want to buy a newly-built home, you should buy one that is either already completed or is about to be completed. New construction buyers must occupy the home by the deadline date.
• Misunderstand your eligibility – The right to use the tax credit is gradually phased out as adjusted gross income (AGI) rises from $75,000 to $95,000 on a single return or $150,000 to $170,000 on a joint return. If unsure of your eligibility, check with your tax advisor.
• Fail to plan ahead – There is an exception to the no-pay-back rule: You do have to repay the $8,000 if you sell the house within three years of the time you buy it. The home must be your principal residence and there is a recapture provision if you move out or sell before three years.
• Miss the boat for no good reason – Inertia…fear of rocking the boat…just-too-busy syndrome. Take advantage of today’s buyer’s market and talk to a real estate professional to find out if and how the tax credit applies to your particular situation. Time is running out to take advantage of this financial incentive.

As a Member of the Top 5 in Real Estate Network®, I am committed to providing the most up-to-date information on the details surrounding the First-Time Homebuyer’s Tax Credit. Please e-mail me with any questions you may have and please forward this article to any family and friends who may qualify for this great opportunity.