Tax Credit/Financial Incentives

The American Recovery and Reinvestment Act is a $789 billion stimulus package aimed at bolstering the economy.

The first-time buyer tax credit has been expanded to $8,000 for buyers who have not owned a home during the last three years.

First-time homebuyers who purchase homes from the start of 2009 until the end of November 2009 may be eligible for the lower of an $8,000 tax credit or a tax credit worth 10% of the value of the home.  Remember, a tax credit is very different from a tax deduction: A tax credit is equivalent to money in your hand!

Key provisions of the tax credit:

• Homebuyers are not required to pay back the credit if the buyer remains in the home for more than three years.
• The tax credit is fully refundable, allowing buyers to claim the full amount of the credit regardless of their tax liability.
• The tax credit has been extended through November 30, 2009.
• Homebuyers who receive the tax credit are allowed to participate in the mortgage revenue bond program.
• State housing finance agencies are permitted to help buyers at closing by advancing the credit amount as a loan using tax-exempt bond proceeds.
• The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.  Buyers are required to repay the credit if they sell their homes within three years.
• The tax credit is applicable to any home that will be used as a principal residence.  Based on that guideline, qualifying homes include single-family detached homes, as well as attached homes such as townhouses and condominiums.  Manufactured homes and houseboats used for principal residences also qualify.

Missouri has figured out how to turn the first-time buyer tax credit into a down payment!

A new loan program is available to first-time homebuyers in Missouri to turn the federal tax credit into a down payment on a home.  The Missouri Housing Development Commission will loan a first-time buyer $6,750 to use as a down payment at closing and be paid interest-free when the homebuyer receives the credit at tax time.