Stimulus help for homebuyers - Is it a credit? Is it a loan?
We are still waiting on final details of what Congress will turn out on the “$15K homebuyer tax credit”. Here is what we think we know right now:
· The $15,000 tax credit is more of an interest free loan from the government. You purchase a home and then are able to apply for this ‘credit’ when filing your tax return. You get $15k from government and repay the money to the government, interest free, in 15 equal installments via your annual taxes.
· The tax credit is non-refundable, which means that buyers can only claim the credit if they owe income taxes. (The Home Buyer’s credit of 2008 which was $7500 could be credited whether you owed/paid taxes or not)
· Buyers can claim the credit on two years of tax returns.
· No income limits
· Applies to people purchasing primary residences only
· If you sell the property before the 15 years has occurred, the entire balance is due from the proceeds of the sale. Not enough money from the proceeds? Government is out some money, you are off the hook.
· You DO NOT have to be a first-time home buyer to receive this credit.
· Credit is up to 10% of sales price up to $150,000 sales price. In our Greater Phoenix Housing Market, most buyers will be able to take the maximum amount of $15,000.
I don’t like the fact that Congress is calling this a “credit”. I think to more accurately describe this to the public it should be correctly identified as, “$15k interest free loan for home buyers”. Leave it to the government to say they are giving you a credit, but want it back. I am glad when my bank credits me something, I don't have to worry about them taking it back; or that my school teachers didn't take back their extra-credit that they gave me in school. If you have to pay it back, it's called a " L.O.A.N "
Now for the disclaimers: Please consult your qualified financial planner or CPA for more information and details on this program. This is information I have gathered from several different sources and is changing daily.
