OK…..that statement is not completely correct! But on the other hand, it’s not completely incorrect either. So let’s take out the infomercial aspect of the statement and start again.
$7,500 San Mateo First Time Home Buyer Tax Credit
Not as dramatic, but still exciting if you are a San Mateo first time home buyer. What I mean by a first time home buyer is not necessarily somebody buying their very first home. This could also be somebody that has not had ownership interest in a primary residence in the last three years. Either way, as long as you have closed escrow between April 9, 2008 and today or will be closing today through July 1, 2009 you are eligible for a $7,500 tax credit.
OK….you got me, it’s not that cut and dry. Here are the conditions…..
- The home must be your primary residence
- You must not be a non-resident alien
- Individuals must have a modified adjusted gross income of less than $75,000 to receive full credit. The credit gradually phases out if you make more than $75,000 and phases out completely at $95,000.
- Couples must have a modified adjusted gross income of less than $150,000 to receive full credit. The credit gradually phases out if you make more than $150,000 and phases out completely at $170,000.
OK so you meet all the conditions….still excited? Ready for your $7,500 check? Here’s how it works……
- The tax credit is 10% of the home’s sale price with a $7,500 maximum
- It’s a credit, not a tax deduction (Please talk to your tax advisor)
Hey, not too bad. Still excited? ……Well, it’s time to stop beating around the BUSH. The tax credit, brought to you by the Housing and Recovery Act of 2008, is actually a tax free zero percent loan to San Mateo first time home buyers. You have to start paying back this loan within two years of closing and make equal payments over a 15 year period. If you sell your home for a profit, you pay the loan off first. If you do not make a profit or you sell your home for a loss, the remaining balance is forgiven. If you do take a loss, you may have to count the tax credit as income and, of course, pay taxes (again, please consult your tax advisor).
It may not be as beautiful as first advertised, but it can still be a huge deal to San Mateo first time home buyers growing accustom to the financials of being a home owner.
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Chris Williamson is a Mortgage Advisor with Mortgage California specializing in San Mateo Mortgage.
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