The Obama Administration’s $8,000 federal tax credit has made buying Houston bank foreclosures become easy for some first-time buyers in Texas.
Under the federal program, first-time buyers who purchase foreclosure properties from January 1 to November 30 of this year may become eligible for a federal tax credit of $8,000, or an equivalent of 10 percent of the total value of the property tax credit.
For tax credit purpose, the acquisition date starts when closing of the deal occurs and the property’s title is transferred to homeowners. Additionally, if homeowners plan to make the property their principal residence, they will qualify for the tax credit.
Under the law, first-time homebuyers are those who have not owned a residence for the past three years prior to the purchase. Several types of properties on Houston bank foreclosures that qualify for tax credit are attached town homes, single-family homes, condominiums, mobile homes or manufactured homes and houseboats.
For more good news, any person who wants to buy a house in Houston can use the federal tax credit as down payment. According to industry experts, not all states allow federal stimulus funds to be used as down payment.
Tax credits are different from tax deductions. A tax credit is equal to the money that the buyer has while a deduction only lessens the buyer’s taxable income. The tax credit gradually phases out when a certain income bracket has been reached by the buyer. The income level for single buyers is not less than $75,000 while for couples, it is $150,000. Buyers are required to pay the credit if they decide to sell their houses within three years.
Aside from the tax credit, there are other government programs aimed at attracting homebuyers. One program is the tax incentive for making properties green. This initiative is designed to promote energy savings in houses in Houston and to encourage energy efficiency.
Another program is designed to boost support for the revival and stabilization of neighborhoods. An estimated $2 billion is projected to be spent on the program to help neighborhoods buy and rehabilitate vacant and foreclosed properties.
An initiative worth waiting is a plan to help financially-strapped homeowners before they miss their monthly mortgage payments. Reports indicated that about $50 billion will be spent to help homeowners avoid foreclosures.
