Housing Rights

Housing Rights - 11/21/08

INTRO: With housing prices falling, and foreclosures rising, this may be a terrible time to try to sell a home. But it's a great time to buy a residence. And now there's even better news for buyers – Uncle Sam wants to help!

1. HOW WILL THE GOVERNMENT HELP US BUY A HOME?

A. There are a number of benefits for home buyers under a new federal law called the Housing Assistance Tax Act of 2008.

Most important is the $7500 refundable tax credit. It works like an interest free loan. Uncle Sam gives you $7500, and you repay it in small installments over 15 years, paying no interest or other costs.

2. WHO IS ELIGIBLE?

A. Your income must be below $75,000 if you're single or $150,000 if you're married.

And you must be a first time home buyer. But you're considered a first time home buyer if you haven't owned a principal residence for the last 3 years.

3. ARE THERE ANY OTHER BENEFITS FOR HOME BUYERS FROM UNCLE SAM?

A. Yes. Many of us deduct our property taxes. But until the new law, you could only deduct property taxes if you had enough deductions and enough income to itemize deductions. For 2008, even if you can't itemize and you only take the standard deduction, you get an added deduction of $500 ($1000 for a married couple) for your property taxes.

4. IS THERE ANY GOVERNMENT HELP FOR PEOPLE WHO ALREADY OWN A HOME?

A. Yes. The new law actually lets homeowners refinance and reduce the balance of the debt. Here is how it works.

  • The bank has to agree to take a hit on the amount it is owed, the debt has to be reduced to 85% of the value of the home.
  • The FHA will insure a new debt that must be a fixed rate of interest for at least 30 years. The idea behind the program is to let people write off some of their debt and get them into a fixed rate long term mortgage that they can afford to pay and keep their home.
  • Now here's the hitch. The government will receive between 50- 100% of any appreciation on the house if it is later resold or refinanced. So in other words, you cut your debt now, but you pay the government later if your home appreciates.

CLOSE: This may be a great time to buy a home. Prices are down, and Uncle Sam wants to help. And for existing homeowners, there's help too!