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Sacramento, CA
This is a great time for Sacramento First Time Home Buyers.
Money is falling from the sky!
$8000 tax credit for 1st Time Home Buyers is a great way to start the year!
There are some stipulations and there will be SCAMS out there trying to scam their way to you so KNOW your rights and understand the rules so you are NOT a victim.
Don’t believe people just because it is what you want to hear. KNOW what the facts are and don’t be taken advantage of. Remember, to use a reputable Lender and stay away from those INTERNET lenders. Read the U. S. Department of Housing and Urban Development letter for an understanding of the rules.
As a home buyer you can NOT use the $8000 as part of your mandatory 3.5%down payment with FHA. You MUST have 3.5% down from other sources. You can use the $8000 toward your closing costs and you can add it to the 3.5 % down payment making for more down.
The ONLY way you can use this money at the time of close is by being given a second or what we call a bridge loan from any Federal, State or local agencies and any FHA mortgagee or FHA approved nonprofit organization.
Remember, it is FRAUD if anyone tells you that you can use the $8000 before you close on the house you are buying unless it is given to you as a loan through the entities I mentioned above. It is very specific.
Remember, you need to buy a house BEFORE December 1, 2009 to claim the tax credit on either your 2008 or 2009 tax return. This applies to any first time home buyers closing on a purchase after April 8, 2008. And a first time home buyer is anyone who has NOT owned a home in the past 3 years.
This tax credit does not have to be repaid as long as you live in the house and it is your primary residence for 36 months. You can claim up to 10% of the purchase price but only up to $8,000 or $4,000 for married individuals filing separately.
However, if your adjusted gross income is more than $75,000 or $150,000 for joint filers than you may find this tax credit does not apply to you. Always check with your tax consultant.
You can wait and get your $8000 tax credit after your home or condo closes.
What a nice gift that would be! Need carpet, want to paint, need appliances or furniture? This could be a God send for all those little things you might like to have when you move into your new home.
Better yet, with this economy, put it in the bank and save it for a rainy day!
Remember, the scammers will be out there like flies to honey so BEWARE!
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Great info Gena. I know there is a lot of inaccurate info out there. Great job clearing the air!
Thanks Rob. Now, let’s hope these new home buyers do it right and stay away from the scams that are likely to occur.
Thanks for sharing the rules regarding the First-Time Home Buyer Tax Credit. There’s a lot of info on the net about it but they’re mostly contradicting and cancelling each other out!
Hopefully, this now explains how the money should be used and to avoid all scams. It didn’t help when organizations such as NAR at a recent convention misinterrupted how this money could be used and misinformed a lot of Realtors ®. Common sense needs to prevail. The U. S. Internal Revenue will NOT allow a 1st Time Home Buyer to collect money before filling taxes so the only way is to borrow the money as a second (bridge loan) until filing your tax return from one of the authorized agencies.
I just found out while trying to file my taxes that you do not qualify if you bought your home from a relative. My husband and I are 23years old and have 3 children. We bought our first house from my parents and they bought another house. Now I find out that we do not qualify for the credit because parents were selling their houses to their children and then claiming it back just to get the $8,000.
I do not find it fair that others ruined it.
Shannon,
I didn’t know that. Thanks for sharing your hard knock situation here for the other readers who may find themselves in the same dilemma. Sorry the tax credit didn’t work out for you.
Yes, there are rules to the tax credit that you need to read carefully. Hopefully, you love your house and your parents sold it to you at a good price.