Home buyers’ grant subsidy for 2009

The 2009 stimulus bill increases the housing tax credit from $7,500 to $8,000 and, most importantly, eliminates the repayment requirement, effectively making the $8,000 a grant subsidy. But this deal is only good for those who are buying their principal residence, who have not owned a home within three years of closing and who close between Jan. 1 and Dec. 1 of 2009. Also, a phase-out reducing the $8,000 amount to zero begins at $75,000 AGINet income and profits from all three income categories (trade or business, passive and portfolio) for single taxpayers and $150,000 AGI for joint-filing couples, eliminating the subsidy for very high-end homebuyers.

first tuesday take: The subsidy is a help, especially if you have no savings, are employed, have paid income taxes to the IRS exceeding the $8,000 maximum amount, and want to buy a home for less than $250,000 on an FHA-insured, purchase-assist loan, or make a 10% down payment on a conventionally financed purchase of an $80,000 home. The phase-out of the $8,000 tax credit grant will not likely affect typical buyers of homes below $800,000 in price (a price of five times the $150,000 AGI which is a rule of thumb to qualify for a maximum 80% loan at 6% with a payment-to-income ratio of 31%).

Re: “Window open ’til Dec. 1 for homebuyers’ tax credit” by the L.A. Times

See the IRS website for the tax credit included in the Housing and Economic Recovery Act of 2008