Lets look at an example: Any house in our area will be $80K+, so the full tax credit will apply.
April 15. 2010 rolls around, a couple with 2 children (married filing jointly) has gross income of about $120K and AGI of about $80K and a federal tax liability of $6,800. You apply the tax credit which is greater than the tax liability and you get a refund of $6,800. A little while later you get a tax refund check for $6,800.
How on earth is this helping housing? Most people need the downpayment, not a tax refund.
What it will do is stimulate spending in 2010 when people get the refunds. So much for any quick fixes.
With home inventory at such a high level this is an even greater incentive for first time home buyers to start shopping today!
The tax credit is equal to 10 percent of the homeâ€™s purchase price up to a maximum of $8,000.
The tax credit does not have to be repaid,
Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.
Nelene Gibbs, Realtor, e-Pro
William E. Wood & Associates