The federal government has enacted several initiatives aimed at helping home buyers. Most of these incentives are temporary so if you’ve been on the fence about jumping into the real estate market, there’s no better time than the present!
First-Time Home Buyer Tax Credit
The American Recovery and Reinvestment Act provides for a tax credit equal to ten percent of the cost of the home, up to a maximum credit of $8,000. The credit is available to people who have not owned a home in the past three years for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. The credit does not require repayment if the buyer remains in the home for three or more years. There are income guidelines on the credit. Individuals with an adjusted gross income up to $75,000 (or $150,000 if filing jointly) are eligible. The credit is phased down for those earning more and is not available for those with an income above $95,000 (or $170,000 if filing jointly.) Most of the mechanics of the credit will be the same as under the 2008 rules: the credit will be claimed on a tax return to reduce the purchaser’s income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.
FHA, Fannie Mae and Freddie Mac Loan Limits
The current non-jumbo loan limits for FHA, Freddie Mac, and Fannie Mae loans in Rhode Island is $475,000. These 2009 limits will expire December 31, 2009.
The Rhode Island Housing Resources Commission offers information about low interest loans available through the Neighborhood Stabilization Program for the purpose of purchasing, managing, renovating and selling foreclosed and abandoned properties. The program also offers up to twenty percent of the price of the home to be used for the down payment or repairs for properties within specified census tracts. After purchase, the homes must be used to assist individuals and families with incomes at or below 120% of area median income. Twenty-five percent of funds must be used for households with incomes at or below 50% of area median income.
Fannie Mae Eases Investor Loan Limits
Due to a policy change announced in February, 2009, Fannie Mae will now allow borrowers to take out loans for up to 10 investment or second home properties, up from a maximum of four.
Energy Efficient Housing Tax Credits & Grants
If you’re interested in a property that may need a new furnace, windows or insulation, you should know that through 2010, homeowners will be able to claim a 30% tax credit (up from 10%) for these purchases. Another $5 billion will be made available through the American Recovery and Reinvestment Act to modernize the nation’s electricity grid and install smart meters on homes that help to save consumers money. There is also $5 billion for weatherization assistance for low income households and $2 billion for federally assisted housing – Section 8 – efficiency efforts. For more information about accessing funding for promoting energy efficiency, go to http://www.riselink.com.
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