First-Time Buyer Tax Credit Clock Ticking Down

Time passes so quickly for me these days.  It seems like just a couple weeks ago that I was fretting about the onslaught of the Arizona summer heat, and now we’re almost through the dog days of summer.   Along these same lines, I realized this morning that we’re nearing the deadline for taking advantage of the $8,000 tax credit for first time home buyers.  Ack!

The American Recovery and Reinvestment Act of 2009 provides for a tax credit to first-time home buyers who meet certain qualifications when buying a principal residence.    BUT…  the house must be CLOSED prior to December 1, 2009.

So, what is a first-time home buyer?  That term is somewhat of a misnomer.  You need only have not owned a primary residence within the last three years prior to the date of the contact.   If you’re a married couple, neither spouse can have owned a home in the past three years, or have been a co-borrower, for example with a son or daughter.  You CAN have owned an investment or second home under this program, however.

This is a true tax credit, so you will actually receive it as a tax refund from the IRS (less any outstanding tax or federally guaranteed student loans debts).

I found a couple of excellent sources to learn more about the program.  This FAQ gives a great overview:  http://www.federalhousingtaxcredit.com/2009/faq.php#2.  The IRS site explaining the entire act can be found here:  http://www.irs.gov/newsroom/article/0,,id=204335,00.html?portlet=6.   Your lender will be able to explain the program to you and how you can best utilize it to assist in your home purchase.  And of course, you should ALWAYS consult with your accountant, attorney, and/or tax professional regarding how this will impact you personally.

We’re running about 45 days to close on purchases today.  There is a TON of activity in our local market right now, as everyone scrambles to take advantage of record low home prices and the ticking clock on the tax credit.  To be closed by December 1, you really need to be in contract by the first of October.  That’s not much time to find your dream home!

The $8,000 tax credit for first-time home buyers is an amazing opportunity, and one that should be taken advantage of by everyone who qualifies.  Several cities in the Valley also have down payment assistance programs, and these can be used in combination with this tax credit.   Potentially, this would allow you to be in your home with no cash out of pocket, and an $8000 tax refund check in your hand in a few short weeks. 

I don’t know about you, but that’s enough to get me out in the heat and looking at houses!

Got questions? Give me a call at 480.247.8443 or send me an email kbaker[at]azrealestatemama.com.