The Train Is Leaving The Station; Do You Want to Be On It?
Signs of summer are increasing and so are signs of a real estate market slowly coming back to life. I’ve been saying this for a number of weeks now and you may think it sounds like a broken record, but the evidence continues to mount. Anyone who has been waiting for the bottom of the market to buy a home should seriously consider making a move now, or risk missing the time of best opportunity. Interest rates are still hovering around the 5% mark and there’s still an unbelievable selection of homes—new and resale—at prices not seen for several years.
First-time home buyers (or those who haven’t owned a home for at least three years) should especially get into the market as soon as possible to take advantage of a tax credit of up to $8,000 that is available for home purchases closed before December 1st of this year. A tax credit is much more advantageous than a tax deduction. Every dollar of a tax credit reduces your tax obligation by a full dollar; every dollar of a tax deduction only reduces your tax obligation by whatever percentage tax bracket you’re in. For example, if you are in one of the higher income brackets and pay tax equal to, say, 28% of your adjusted gross income, an $8,000 tax credit would reduce you tax by a full $8,000, but an $8,000 tax deduction would only reduce your tax by $2,240. Either one is good, but, obviously, an $8,000 reduction in tax is far better than a $2,240 deduction. Even better, if the net amount you owe is, for example, $3,000 before application of the $8,000 tax credit, then you receive a $5,000 refund. In essence, your Uncle Sam is offering to give you up to $8,000 towards the purchase of a home. Why not show your appreciation by taking him up on his offer?
First-time home buyers (or those who haven’t owned a home for at least three years) should especially get into the market as soon as possible to take advantage of a tax credit of up to $8,000 that is available for home purchases closed before December 1st of this year. A tax credit is much more advantageous than a tax deduction. Every dollar of a tax credit reduces your tax obligation by a full dollar; every dollar of a tax deduction only reduces your tax obligation by whatever percentage tax bracket you’re in. For example, if you are in one of the higher income brackets and pay tax equal to, say, 28% of your adjusted gross income, an $8,000 tax credit would reduce you tax by a full $8,000, but an $8,000 tax deduction would only reduce your tax by $2,240. Either one is good, but, obviously, an $8,000 reduction in tax is far better than a $2,240 deduction. Even better, if the net amount you owe is, for example, $3,000 before application of the $8,000 tax credit, then you receive a $5,000 refund. In essence, your Uncle Sam is offering to give you up to $8,000 towards the purchase of a home. Why not show your appreciation by taking him up on his offer?
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