WHAT IS THE FIRST-TIME HOMEBUYER TAX CREDIT AND CAN I FILE FOR IT?
The First Time Homebuyer Tax Credit was established with the Housing and Economic Recovery Act of 2008.
The credit was established for first-time homebuyers who could receive as much as $7,500. After the great economic downturn in 2007, then President Barack Obama introduced what is known as the Housing Economic and Recovery Act in an attempt to restore confidence in the mortgage industry and particularly in lending institutions.
The first-time homebuyer tax credit isn’t a cut-and-dry equation. The credit can either reduce one’s tax bill or increase. Claiming the credit, however , is dependent on the year in which it is claimed and one’s tax status. It contains different stipulations and repayment structures.
For example, for homes purchased in 2008, the credit is similar to a no-interest loan and must be repaid in 15 equal, annual installments beginning with the 2010 income tax year.
Can I still claim the credit?
The credit option expired on April 30, 2010, which means you could claim it as long as your closing occurred on or before September 30, 2010. If you you did purchase a home for the first time between 2008 and 2010 and you’ve never claimed the credit, you may still be eligible.
Just because the homebuyer credit has expired, that doesn’t mean that there aren’t opportunities to for tax incentives at the your state and national levels.
HMFA Smart Start for New Jersey Home Buyers
Financial Assistance for Homebuyers in New JerseyThe New Jersey Housing and Mortgage Finance Agency (NJHMFA) aims to make the mortgage process more affordable for first-time homebuyers with the [Smart Start](https://www.state.nj.us/dca/hmfa/homeownership/buyers/smart/) program. The program’s purpose is to make funds available for eligible applicants who are interested in purchasing a home but need financial help to pay the upfront costs associated with a mortgage transaction, which include the down payment, closing costs, and prepaid items.
Smart Start offers assistance with down payment and closing costs in the form of a zero-interest, second mortgage, up to 4 percent of the primary loan amount. For those receiving down payment assistance, there will be an add-on to the interest rate of the NJHMFA first mortgage.
In order to be eligible for the Smart Start program, all applicants must meet certain requirements. They must be first-time homebuyers, financing their home with an HMFA primary mortgage. This could be either the Agency-originated 100% Financing Program, the First-Time Homebuyer Program, or the Homeward Bound Program. While there are no income limits for the Smart Start program, applicants must meet the income limits of the program providing the first mortgage.
Any property being purchased must serve as the applicant’s primary residence within 60 days of closing and must be located in a Smart Growth Area, as determined by the Agency’s Site Evaluator. While there is no maximum purchase price for the program, it cannot exceed the limits of the Agency program providing the first mortgage loan, if any
*Seller-funded down payment programs were eliminated in the Housing and Economic Recovery Act of 2008, but States and Local government agencies are still permitted to help borrowers finance their homes with second mortgages and grants. These agencies set different requirements that a borrower needs to meet in order to qualify for the grant programs, such as property location, and purchase price and income limits.
Contact Cooperative Preferred Realty Group for more help and guidance with first-time homebuyer credits and options.