The Housing and Economic Recovery Act 2008 – what does it mean to you?

Well, the biggest talk about this act is the $7,500 tax CREDIT for first time homebuyers. However there has been very little in explaining what this actually is and how it works.

Well firstly: eligibility – you have to be a first time homebuyer and have to have purchased your property (the closing date) between April 1st 2008 and July 1st 2009 – before you say "what constitutes a first time buyer?" well, the provisions go on to say someone who has not owned a principle residence in the last three years.

Property eligibility is loose also, condo’s, townhomes, single family homes, manufactured homes, houseboats etc! They are all in there! There are naturally income limits for this credit, for instance you cease to be eligible for the full credit if you earn over $75,000 (single) or $150,000 on a joint tax return. After that the credit diminishes and you cannot qualify once you surpass $95,000 (single) or $170,000 (joint)

The nice thing is that the credit is just claimed on your federal tax return, no extra paper work! However the only snag is this, the credit, is what it says, a credit, not a deduction, meaning that it has to be repayed. If you receive the full $7,500 credit then $500 a year would be needed to repay it after an initial two year period paying nothing. Additionally, if you sell the property before you pay it back to the government then the credit will come from the proceeds of the sale.

The credit is designed to stimulate the economy and the housing market, it will be interesting to see how it does this!

If you are thinking about purchasing a property in New Albany or the surrounding Central Ohio/Columbus Metropolitan area then please contact the Raines Group for professional Real Estate advice.

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