• George Wolf
• Oct 9,2008
• In: Foreclosure Crisis

Home Buyer’s Tax Credit That Prevent Foreclosures

Foreclosure prevention act

The American Housing Rescue and Foreclosure Prevention Act of 2008 help the families that are facing foreclosure in retaining homes by increasing tax credit limit for amateur buyers and low-income households. It also encourages the usage of housing bonds for financing housing projects and rental properties that are affordable hence stabilize the overall housing market. This housing rescue law helps in restoring the lending as well as borrowing stability of the families for future. The act has detailed the available tax programs so as to put up the financial pressure from low as well as middle-income households. The act has helped in restoring confidence in the credit markets and gives boost to the housing market.

Tax incentive

The government has given a tax incentive to the home buyers who are buying the property for the first time so that they can take the advantage and purchase a property before or on June 30th, 2009. This has given a boost to the sluggish housing market and now the huge housing inventory of unsold houses in different regions will get cleared off. The new tax incentive is like an interest -free loan as you pay the principal in increments and no interest charged to you.

Specific facts and information of the program

If the person has not ever purchased any house or at least during last 3 years then he can take the benefit of the tax credit. If somebody has sold his property 3 years back and now lives on rent is also eligible for this tax benefit. If the gross income of single people is $75,000 and less, and for married couples is $150,000 or below then they can avail the tax credit and if the income exceeds then the credit benefit lowers down.
The tax credit doesn’t work for the tax-exempt bond mortgage program of local housing agency and will not work in conjunction with any state also.

Tax repayment

This tax credit must be paid again within an extended time period that start after the completion of 2nd year of purchase and continues up to 15 years. The homeowner who is also a taxpayer makes repayments on tax filings to the government. If somebody sells his home before the repayment period expires and doesn’t gain on sale and home equity then the due amount needs not to be paid from the sale proceedings.

Advantages

This federal tax incentive will bring more of individuals for buying the house so improve the housing market. It will also help the properties owners from becoming victims of the varying foreclosure market as properties will be bought by move up buyers and amateur home buyers. It will also help banks in offsetting losses on the loans with hundreds of tax breaks they get from property owners. This way the banks will always remain subsidized by the tax breaks and won’t force much for the foreclosures. This also makes it easier for the homeowners to retain as well as sell the home. As the tax benefit will ensure easy selling of the house whenever required.