First time home buyers Tax Credit
The new first time home buyers tax credit is not what it seems. This is not really a tax credit. It is an interest free loan made by your government to first time home buyers for up to $7,500 of "credit" against your owed taxes. BUT, this will have to be paid back over the next 15 years. Yes you are going into business with your government. They want the money back. The reason for this is that they can call this a revenue neutral credit.
The problem is that in order to qualify for this credit you have to make less than $80,000 to get the whole credit. So who can afford a home when they make less than $80,000 in Calif any more.
There is new credit for 2009 which is $8000 from the IRS. This is also a refundable credit but you do not have to pay it back like those poor saps that got the $7500 credit for purchase in 2008. (sorry about the poor saps comment)
There is also a $10,000 credit in the State of California for a first time home buyer of a brand new home. This one is a little different. It is not a refundable credit it is a credit against actual taxes due on your California tax return. So if you look on your California tax return on line #34 you will find a number. Whatever that number is you will receive that much as a credit up to $3,300 of credit per year over three years. If line #34 is say $500 then that is the credit you will get for that year and in most cases you will not have anything due on line #34 in the following year due to now having a mortgage and property taxes to deduct so the only credit you would get in this example is $500 of a total credit of $10,000.
As you can see this California credit is pretty much worthless to anyone that makes an average wage in Calif. So, don't let those fast talking new home salespeople talk you into buying something thinking that you will get a big credit. Remember those sales folks selling homes are the same guys that use to finance those great mortgages that were offered which caused all this problem in the first place. (My cynical statement)
If you need any other information please feel free to email our office.
The problem is that in order to qualify for this credit you have to make less than $80,000 to get the whole credit. So who can afford a home when they make less than $80,000 in Calif any more.
There is new credit for 2009 which is $8000 from the IRS. This is also a refundable credit but you do not have to pay it back like those poor saps that got the $7500 credit for purchase in 2008. (sorry about the poor saps comment)
There is also a $10,000 credit in the State of California for a first time home buyer of a brand new home. This one is a little different. It is not a refundable credit it is a credit against actual taxes due on your California tax return. So if you look on your California tax return on line #34 you will find a number. Whatever that number is you will receive that much as a credit up to $3,300 of credit per year over three years. If line #34 is say $500 then that is the credit you will get for that year and in most cases you will not have anything due on line #34 in the following year due to now having a mortgage and property taxes to deduct so the only credit you would get in this example is $500 of a total credit of $10,000.
As you can see this California credit is pretty much worthless to anyone that makes an average wage in Calif. So, don't let those fast talking new home salespeople talk you into buying something thinking that you will get a big credit. Remember those sales folks selling homes are the same guys that use to finance those great mortgages that were offered which caused all this problem in the first place. (My cynical statement)
If you need any other information please feel free to email our office.
posted by Traxler | 3:08 PM
0 Comments:
Post a Comment
<< Home