Government Help: Buying a Home

Even if you owned a home before – you can still jump on the bandwagon of the government tax credit for buying a home – even a houseboat. Amazingly enough, this home does not have to be a single-family detached run of the mill type home to receive government assistance.

The Government will help you to buy a houseboat – or a condo or a modular or a town home or a single family detached home. While you must not have owned a home for the last three years before the purchase of this next one, you do not have to be a first time buyer to benefit from this. The home must be purchased before July 1st 2009 (i.e. the closing date must be before June 30th 2009). This tax credit incentive is part of the Housing and Economic Recovery Act of 2008 and gives current purchasers who have been renting for three years the chance to claim a tax credit of up to $7,500.

Your income should not exceed $95,000 per annum (single) and married couples must fall under the modified adjusted gross income level of $170,000. This is the income limit to receive the maximum $7,500 tax credit. You may still be able to qualify for a partial tax credit if you earn more, but beware – everyone only qualifies for up to ten per cent of the purchase price to a maximum of $7,500. This means if you purchase a home that is $75,000 you will qualify for the full ten per cent as it is also the maximum limit – $7,500.

If you buy a home that is $100,000 you will not qualify for ten per cent (which is $10,000) as this is over the maximum allowable of $7,500, so you will get the maximum of $7,500. Under the same rules if you buy a home that is $50,000 (dream on!) then you will only qualify for the maximum ten per cent tax credit. On a $50,000 house, this is $5,000.

As for the rules regarding the duration of the tax credit, remember these tax credits are like a loan, you do not have to ‘return’ them at all for two years, then you may do so at $500 per year. You have 15 years to repay them, so wait until you are settled into your new home, and on your first pay raise – use it all up by repaying your tax credits.

It is easy to claim the tax credit as it can be claimed for on your federal income tax return. If you know that you qualify for the tax credit you can even access the money quicker than by filling in your Federal tax return. IRS Publication 919 contains rules and guidelines for this quick access and you can record this through the W-4 via your employer or as an adjustment through your quarterly estimated tax payment. This will give you up to an extra $7500 that is tax free and can be used as part of your down payment.

If you make use of this advantage, you could save a significant amount of money that you can use for improvements or to knock off a chunk of your mortgage, if it allows for payments on the premium. There’s a lot you can do with that much in savings – use it wisely.

For information on Grayton Beach real estate, contact Michael Taylor, your Destin FL real estate expert, at

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