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Federal Housing Tax Credit: Want $8,000 Dollars from Obama? Just Buy a Home

By Boyce Watkins, PhD on Oct 26th 2009 1:07PM
Filed under: Personal Finance, Dr. Boyce Money, Housing

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Today, I got a call from NPR about the $8,000 first time home buyer tax credit being offered by the federal government. So, given the love I have for my "peeps" here at AOL BV, and my passion for African American wealth building, I thought I'd share some of this knowledge with the folks I love so much. The problem is that the government is still deciding if they want to extend the federal housing tax credit, but I certainly hope they do. For now, the first time home buyer tax credit ends on November 30 of this year.

The federal housing tax credit is pretty straight forward: If you are buying a home for the first time and your income doesn't exceed a certain level, the government will flat out give you $8,000. This is better than when Oprah was giving away free cars on her show. So if you are thinking of taking advantage of it, please be prepared to act fast.

Here are some things you should know about the first time home buyer tax credit:



1) What is a first-time home buyer? If you have not had a principal residence for 3 years, then you are a first-timer. Even if you own a home that you are renting out, you still probably qualify.

2) If you are married, then both you and your spouse must be first time home buyers. If you buy a home with another person you are not married to, then one of you must be a first-timer, and only one of you gets the tax credit.

3) "Blinged out" folks need not apply. The tax credit starts phasing out if you earn between $75k and $95K per year. If you earn over $95K, you need to find your own tax credit, because Barack's not giving you anything.

4) This is a refundable tax credit. That distinction is important, because it means that if you only owe the government, say, $1,000 in taxes, they will simply send you a check for the other $7,000 ($8,000 minus $1,000). Some tax credits are not refundable, so this one is especially worthwhile.

When it comes to the $8,000 first time home buyer tax credit, the bottom line is this: Jump on it now. Owning a home is one of the first steps toward building wealth. Before buying a home, read a book or two on home buying, so you can understand financing, credit scores, inspections, insurance and closing costs. It will be a great educational experience and something fun for you and your partner (if you are in a relationship). The government is not usually this generous, so this is your opportunity. You should take advantage while you can, especially if the federal housing tax credit is extended past the November 30, 2009 deadline.


Dr. Boyce Watkins is a Finance Professor at Syracuse University and a leading Black Speaker. To have Dr. Boyce commentary delivered to your email, please click here.

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