Take Advantage of the Stimulus for First Time Buyers

by Marikor Hidalgo

The American Recovery and Reinvestment Plan is part of the stimulus plan of the federal government specially regulated to assist first time home buyers. The program grants tax credit of up to 10% or a maximum of $8,000 refundable tax break for eligible home buyers. This is a financial assistance for those who have not acquired or bought any properties in the past or has not purchased a home in the past three years. It is truly a big help for home buyers especially in the present economic conditions and the current impact of the subprime crisis and the credit crunch. This stimulus plan is not a loan therefore qualified applicants are not obliged to pay them back and can enjoy the benefits should they opt to stay in the property acquired for at least three years.

What are the qualifications?

In order to be eligible for the tax incentive, there are important qualifications that applicants must comply with.

The stimulus plan is primarily regulated for first time home buyers therefore those who have higher chances of qualifying are those who are eligible for this category. When you say first time home buyers, the category is actually divided into two. First is those who have not purchased any house at all and the second is those who have in fact bought a property more than three years ago, sold it and rented a residence ever since. Therefore even if you have purchased a house but were done more than three years before, then you are still qualified for the plan.

The program is open for individual and joint filers however the IRS is quite strict with the income of each taxpayer or applicant. For individual applicants, he must not make more than $75,000 in order to be eligible while for couples who file a joint application, they must not exceed an income of $150,000 when put together.

Lastly, to take advantage of the stimulus for first time buyers, it is important to make the home purchase within January 1 to December 1 of the year 2009. Any purchase or house acquisition done before and after the said dates are not qualified for the tax incentives. Home buyers must also comply in filling out the IRS form 5405 to certify their purchase is valid and done within the said timeframe.

Furthermore, home buyers who wish to enjoy the monetary assistance from this stimulus plan must also make sure that the property they are going to buy will be used solely for the purpose of a primary residence. Any property that will be converted and used as vacation houses or rental units will not be considered for the program.

It is indeed a remarkable program that encourages potential home buyers to take advantage and grab the opportunity more so if they are eligible for the program. This is one way that the federal government is assisting individuals in materializing their dreams and at the same time boosting the real estate industry.