Anyone cashing in on $8K First Time Homeowner tax credit?

[Cuba]

I'm about to take the plunge into home ownership and got the details on the $8K tax credit the senate repubs got into the spending bill. It's for first time home buyers, must buy between 1/1/09 and 12/31/09, must make $75K or less individually to get full credit (after that the credit begins to taper off), total of $8K tax credit. You do not have to pay it back unless you sell within 3 years and it must be your primary residence. If you owe less than $8K in federal taxes for 2009 they cut you a check for the difference.

This is a big help for me since even if you're only putting 5% down this translates to 10% real quick after closing costs, fees, etc. and that's a lot of cash- I maxxed out my exemptions last week to boost my savings efforts. The actual monthly expenditure for me will be reduced by buying vs. renting due to this credit, the mortgage interest write off, property tax write off, and some other refinancing I'm taking care of. I'm banking the difference to offset the increase in year 2, but worst case senario I'd be paying $250-$300 more a month in 2011 versus my current expenses with renting. This is for a vastly superior residence with a nice sized garage, and I'll be paying for my own equity instead of my landlord's. I have no desire to be house poor so keeping descretionary income roughly the same was important for me.

Is anyone else jumping on this tax credit? I wonder if it will have the desired effect of "stimulating the economy" or are we just wasting it on people who would have bought a house anyway? Or are we allowing more people to make risky investments in houses they can't afford and we'll see the effects after the $8K runs out? What do you think?

 

[robbijer]

Well I hope my wife and I can buy / build our first house this year. We were trying to do so without the tax credit so I am pleased to see it regardless if it will have any desired effects on the economy.

Good luck to you, post a pic of your house when you get it.

Go America

 

[Cali rider]

I'm about to take the plunge into home ownership and got the details on the $8K tax credit the senate repubs got into the spending bill. It's for first time home buyers, must buy between 1/1/09 and 12/31/09, must make $75K or less individually to get full credit (after that the credit begins to taper off), total of $8K tax credit. You do not have to pay it back unless you sell within 3 years and it must be your primary residence. If you owe less than $8K in federal taxes for 2009 they cut you a check for the difference.

This is a big help for me since even if you're only putting 5% down this translates to 10% real quick after closing costs, fees, etc. and that's a lot of cash- I maxxed out my exemptions last week to boost my savings efforts. The actual monthly expenditure for me will be reduced by buying vs. renting due to this credit, the mortgage interest write off, property tax write off, and some other refinancing I'm taking care of. I'm banking the difference to offset the increase in year 2, but worst case senario I'd be paying $250-$300 more a month in 2011 versus my current expenses with renting. This is for a vastly superior residence with a nice sized garage, and I'll be paying for my own equity instead of my landlord's. I have no desire to be house poor so keeping descretionary income roughly the same was important for me.

Is anyone else jumping on this tax credit? I wonder if it will have the desired effect of "stimulating the economy" or are we just wasting it on people who would have bought a house anyway? Or are we allowing more people to make risky investments in houses they can't afford and we'll see the effects after the $8K runs out? What do you think?

I'm curious: What are typical suburban SFHs going for in your area? You know, 1000-1500 sq ft., 20-40 yrs old, typical neighborhoods, etc. My area has dropped to around $425K for a comparable home.

 

[bikerider]

I will be closing on my house this friday :rockon: I will be eligible for the tax credit. I plan on applying it on next years tax return and when i receive it I am putting it all toward the principle of the house.

 

[oso2k]

I cashed in on the OTHER $7.5K first time homeowner refundable tax credit (essentially a 0%, $7.5K loan, repaid in two $3.75K payments over the next two tax returns) for houses purchased between 4/8/2008 and 6/1/2009 (I got my keys on 4/10/2008, woohoo!). I'm getting about ~$15K in this first tax return. Even without this credit, I was getting about $8K. Essentially everything I paid in interest and points. I bought my home on a 3% down, FHA loan. 30 year fixed, 5.5% (when loans were at 6%), one time MIP surcharge of 1%, plus a low monthly MIP of about .1% until I payoff to 80%. A great way of getting into a more expensive home.

I'll be using up that extra $7.5K to payoff my 05 Toyota Tundra TRD Extra Cab 4WD and freeing up about $500 of monthly cash flow and I'll start paying off some of the ~$15K I spent in remodeling the place. I'll also be looking into refinancing my house to a 10-year interest only loan, fixed APR loan. They're out there if you can find them. Otherwise, I'm set where I'm at.

 

[oso2k]

I'm about to take the plunge into home ownership and got the details on the $8K tax credit the senate repubs got into the spending bill. It's for first time home buyers, must buy between 1/1/09 and 12/31/09, must make $75K or less individually to get full credit (after that the credit begins to taper off), total of $8K tax credit. You do not have to pay it back unless you sell within 3 years and it must be your primary residence. If you owe less than $8K in federal taxes for 2009 they cut you a check for the difference.

I don't think I qualify for this. I think me and the wife made too much last year. See my previous post about the other refundable tax credit you may qualify for.

This is a big help for me since even if you're only putting 5% down this translates to 10% real quick after closing costs, fees, etc. and that's a lot of cash- I maxxed out my exemptions last week to boost my savings efforts. The actual monthly expenditure for me will be reduced by buying vs. renting due to this credit, the mortgage interest write off, property tax write off, and some other refinancing I'm taking care of. I'm banking the difference to offset the increase in year 2, but worst case senario I'd be paying $250-$300 more a month in 2011 versus my current expenses with renting. This is for a vastly superior residence with a nice sized garage, and I'll be paying for my own equity instead of my landlord's. I have no desire to be house poor so keeping descretionary income roughly the same was important for me.

A 3% FHA loan may be worth looking into. I know I went from renting at $1075/mo in Pasadena to owning a place in Palmdale at $1375/mo. The size of my garage in Palmdale (a 3 car garage) is now bigger than the place in Pasadena I used to live (~600 sq. ft.) because everything I owned fit in the garage and I still had the compact parking spot available to me. Just in what it was worth to me in terms of a tax return, I got back about $5K w/o the refundable first time homeowner's tax credit. That translates to about ~80% of my closing costs or all the taxes and interest I paid through out the year.

 

[necrotimus]

My only remark on this is.... the housing market will probably continue its decline in most areas this year so I would wait until later in the year to buy... it would suck if you buy a house next week get an 8k tax credit and your house falls another 50k in value. Net loss 42k.

 

[keira]

can't take advantage of either one.....we were fortunate to have made the jump from renting to owning about 8 months after moving in together. i think it's great that people are taking advantage though, and buying up properties for the first time at such a great price (in most places....I wouldn't have paid $450K for my house - 1200 sq.ft. - 150K was plenty!) and with extra incentives. But, please please please, don't buy just because you can, do it because it is the best move for you and your family!!!!!

 

[Cuba]

Thanks for the replies. This is both very exciting and very stressful. I live in a crazy area as far as real estate prices. We never had a boom, never went bust, houses appreciate very slowly here and prices are very low by national comparison. Right now I'm looking at a great ranch style house on a quarter acre in a nice neighborhood, about 2800s q. ft. total, 2 car garage, central air, stone fireplace, deck, security system, 4 beds 2.5 baths including a master bed/bath. It was remodeled fairly recently with fresh paint, laundry on 1st floor, new driveway, walk out basement is finished with 2 huge rooms (office/gym and a huge family room) as well as the workshop with furnace/hot water heater. I'm negotitating my first offer with my buyer's agent as we speak but hope to close at or around $165K. I know, crazy. My sis still lives in the Boston area and is looking at half the house for twice the price. I'll post some pics if it works out, this one is very nice.

I think I am going with the FHA and 3% down, asking the seller for between 3-5% assistance. Wish me luck!

 

[Cuba]

My only remark on this is.... the housing market will probably continue its decline in most areas this year so I would wait until later in the year to buy... it would suck if you buy a house next week get an 8k tax credit and your house falls another 50k in value. Net loss 42k.

Point well taken. My area never had a boom so we are barely affected thus far, foreclosures have only been on really cheap housing so the mid market has been the same. Personally I'm more worried about hyperinflation in the future. Just a theory of mine, relating to printing a trillion dollars in unsecured currency and spending it like tomorrow ain't coming.

 

[04fizzer]

I got the $7500 credit for buying last year (15 year, interest free loan, paid back $500/year or until I sell the house).

It's going to paying back those who lent us money for the closing, and paying off our honeymoon that's in July.

What's left will be paying for this sweet little number (just found it today).

Char-Griller Duo - Gas Grills at Grills Direct
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And yes, my fiance was the one that told me we should do it (and found this one).