By John J. Torrone, Esq.
If you have not had an ownership interest in a home in the past three years the Federal Government considers you a first time homebuyer.
First time homebuyers are entitled to an income tax credit of $8,000.00 if they purchase a home before December 1, 2009. So long as the home costs more than $80,000.00 the first time homebuyer receives the full tax credit. For homes less than $80,000.00 they will still get the tax credit but it will be 10% of the cost of the home and not the full $8,000.00.
This tax credit works dollar for dollar to reduce the first time homebuyer’s income tax liability when they file tax returns. If he/she owes less than $8,000.00 they will receive a refund of the difference of what is owed in taxes and the credit. This is a tax credit so there would not be an obligation to repay this amount; however, if you did sell the home within three years you may be required to pay back the credit.
The Massachusetts Department of Revenue has also indicated that it has a program for certain types of loans where it will loan the first time homebuyer $8,000.00 to be used as a down payment on a home. the loan becomes due in June 2010. For more details on the Department of Revenue Program please visit their website at www.dor.state.ma.us
For someone looking to purchase a home or even considering do so, this is a great opportunity that you do not want to miss out on. As it can take time to complete a home purchase the prospective first time homebuyer should look to enter into a contract for a home as soon as possible. If the sale is not completed by December 1, 2009 you will not be eligible for the credit.
I encourage people interested in this program to contact a lender or myself to discuss whether this is an appropriate program for them. Also, my firm can handle your purchase in a very efficient manner and have been successful in closing transactions on very short notice. I urge anyone thinking about buying a home to get started now, because even though my office can close close a transaction quickly, the surge in home sales occurring because of this program may cause delays from the lenders.
This article is for informational purposes only and is not meant as tax or legal advice. For specific advice on your matter please contact Attorney Torrone directly. For tax advice please contact a qualified tax professional.