Details On The First Time Home Buyers Tax Credit

There have been a lot of questions regarding the First Time Home Buyers Tax Credit that was part of the newly passed stimulus package. There is a good website - www.federalhousingtaxcredit.com/2009/faq.php -  that answers many questions regarding the tax credit and below is a recap of the most important information.  

If you are a first time home buyer then now is the time to buy as you have the benefits of low interest rates, the new tax credit and buyers market pricing.  Biltmore Homes has many great houses, floor plans and prices that are perfect for first time home buyers so let us know how we can help make your first home buying experience a great one.

Tax Credit for Home buyers

• First-time home buyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.
  
• The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.
  

Tax Credit Versus Tax Deduction

• It’s important to remember that the $8,000 tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a home buyer were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, they would owe nothing. 

Better still, the tax credit is refundable, which means the home buyer can receive a check for the credit if he or she has little income tax liability. For example, if a home buyer is liable for $4,000 in income tax, he can offset that $4,000 with half of the tax credit… and still receive a check for the remaining $4,000!
  

Phaseout Examples

• According to the plan, the tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.

To break down what this phaseout means to home buyers who are over those amounts, the National Association of Homebuilders (NAHB) offers the following examples:

Example 1: Assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.

Example 2: Assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.

Remember, these are general examples. You should always consult your tax advisor for information relating to your specific circumstances.
  

Homes that Qualify

• The tax credit is applicable to any home that will be used as a principle residence. Based on that guideline, qualifying homes include single-family detached homes, as well as attached homes such as townhouses and condominiums. In addition, manufactured or homes and houseboats used for principle residence also qualify.
  

South Lakes Is Available for 100% Financing Through USDA Loan

South Lakes which is Fuquay Varina's first master planned community is eligible for the USDA Rural Development Guaranteed Loan Program which offers 100% financing!  This is  GREAT news for home buyers looking to make owning a Biltmore house at South Lakes a reality this year!  The Guaranteed Rural Housing program was designed to bridge the gap between 

government and private mortgage lending which has existed in many rural areas.

With over 2,000 lenders currently participating, this private/public partnership is a proven success story. This program fills a tremendous need for thousands of rural North Carolina families that have the income but lack the down payment ability. 

If meeting the down payment requirements of conventional lending has prohibited you from purchasing a home, the USDA Rural Development Guaranteed Loan Program might be just what you need. Through this program you may now be able to purchase your dream home through Biltmore Homes at South Lakes.

Here are some quick details on the loan program but for more information or to speak with one of Biltmore Homes preffered lenders then please contact us.

• No down payment
• No private mortgage insurance
• Up to 102% financing
• No minimum or maximum loan amount
• No limit on seller's contribution to closing costs
• Closing costs and/or repairs can be financed into loan amount up to the appraised value

First Time Home Buyers Tax Credit From The State of North Carolina

We all know by now that there has been a lot of talk about tax credits in order to get the housing market moving again.  And it looks as if the new federal stimulus will include some sort of tax credit for home buyers.  Well did you know that the State of North Carolina has already passed a tax credit for first time home buyers?  See the below article posted on February 5, 2009 on WRAL that talks about the new incentive.  

If you are first time home buyer then NOW truly is the time to buy.  Biltmore Homes has numerous floor plans at price points that are great for first time home buyers so let us know how we can help you take advantage of these historical buying opportunities!  

Home buyers' tax credit can add money to your paycheck
Posted: Feb. 5, 2009, WRAL.com

RALEIGH, N.C. — The down economy has made it a good time to buy a house, but economic fears keep many from taking the plunge.  Federal, state and local authorities are offering loans and tax credits to help allay those fears and get the home market moving again.

State adds new tax credit for first-time home buyers "There is a misconception that lenders don't have money to lend, and that is not reality," said Sharon Drewyor, director of home-ownership lending for the North Carolina Housing Finance Agency.

On Thursday, Gov. Bev Perdue approved a measure that might help first-time home buyers even more – the Mortgage Certificate Credit, an annual credit of up to $2,000.  "This is actually a true tax credit. It's not a loan," Drewyor said.  The MCC allows home buyers to take a tax credit of 20 percent of interest paid on their mortgage – up to $2,000 – each year. Buyers can adjust the exemptions listed on the W-4 they file with their employer, and less money will be withheld from their paycheck.  "You would see that additional income in your paycheck every month before you make that housing payment," Drewyor said.

Take a typical case: You take out a mortgage of $180,000 with a 5.5 percent fixed interest rate. During the first year, you would probably pay roughly $10,000 in interest on the loan.
Take away $2,000 of that interest and put an equal amount back into your wallet monthly: That's an extra $166 a month.

State government officials said they are excited about the potential of this tax credit to help jump-start the housing market and, more broadly, the economy.  "The MCC will help stimulate the housing market, which in integral to the recovery of our state's economy," Perdue said. "This is just the type of innovation from a state government agency that will help spur our economic recovery."  "With tax credits like this, it's a perfect time for first-time home buyers to enter the market," Drewyor said.

For information on the MCC, other tax credits and participating lenders, visit The N.C. Housing Finance Agency's Web site or call the agency at 919-877-5700 or toll-free at 800-393-0988.