Tuesday, September 16, 2008

A $7,500 reason for Latinos to reach the “American Dream”

By Bill Arce

The new federal tax credit serves as an interest-free loan for first-time homebuyers or for those with no ownership interest for the last three years
Signed into law last month by President Bush as part of a bigger housing bill, the federal tax credit is aimed at assisting homebuyers that are ready and willing to purchase a home but not capable to come up with the downpayment required by a bank.

The law defines first-time home buyers as those who have not owned a home used as their main residence for at least three years. The tax credit is for the purchase of either new or existing homes purchased between April 9 of this year and July 1, 2009.

The tax credit is a refund from Tio Sam. For example, if person owes $2,500 in income taxes, the $7,500 tax credit would wipe out that amount and the federal government also would send out a $5,000 check. If the taxpayer owes nothing at tax season, the total credit amount would be $7,500.

The cash 22 is the tax credit must be repaid over a 15-year period to the federal government; yes, nothing is free in this country. According to RealEstateLatino.com, the federal tax credit is best described as a 15-year zero-interest loan. This is not a bad deal if it helps taking down one of the homeownership barriers facing Latinos (Down Payment).

The $7,500 federal tax credit has a higher income ceiling for eligible home purchasers. Single buyers can get the full tax credit if their incomes are less than $75,000. Married couples will qualify with incomes up to $150,000. The tax credit phases out for higher-earning homebuyers and goes away entirely for single taxpayers earning more than $95,000 and married couples $170,000.

Homebuyers don't have to comply with any homeownership education in order to qualify for the tax credit, how ever, taking a class thru one of the locals homeownership counseling agency is highly recommended by RealEstateLatino.com before purchasing a home.

Homebuyers applying for the tax credit should be aware that, like any other financial obligation, they need to make sure they can afford to repay the tax credit. That way they will avoid being hit by the IRS with penalties and interest in case they default on their promise to repay.

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