As you probably know, the housing market has not been doing so well in the past couple of years. Buying a home and selling a home has become more difficult for people today. Although there are definitely difficulties, with the Housing and Economic Recovery Act of 2008, legislators worked to come up with a away that it would be easier for people like you to be able to buy homes. Today you'll find that there are some great tax credits out there that are available fore first time buyers of Minnesota homes. However, it is important that you understand all about housing tax credits that are available before you start to use them. So, let's take a look at the first time buyer tax credit and how it can help you out.

The $7500 Tax Credit for First Time Buyers
A new tax credit that is now available for first time buyers is the $7500 tax credit for first time buyers. This is a new tax credit that was recently signed into law and although no one is quite sure whether it will really work, it was designed to help bail out the housing market at this bad time for real estate. Of course there are some regulations that will decide whether or not you are able to get this $7500 tax credit. Let's take a look at this credit for first time buyers and how it all works.

- Must Be a Primary Residence - First of all, you'll find that it must be a primary residence if you are going to get this first time buyer tax credit. You cannot use this tax credit to purchase a second home, a vacation home, or investment property. You have to be purchasing a home that will be your primary residence in order to get your $7500 tax credit.

- May Not Have Owned a Primary Residence for 3 Years - Another regulation of this tax credit for housing is that you may not have owned a primary residence for at least three years. If you have, then you do not qualify. However, you can own rental properties and you can have owned vacation homes, but as long as you haven't had a primary residence in the past three years, you should be able to get this tax credit to help you purchase a home.

 

- Income Caps - Of course there are going to be some income caps that can make a difference on whether or not you are able to get this housing tax credit. If you are a single individual, you have to make less than $75,000 in order to get the full amount of the credit. For couples, you must have a modified adjusted gross income that amounts to less than $150,000 if you are going to get the full amount of the tax credit.

The Time Period for These Credits
There is a time period that this housing tax credit is being offered for. You'll find that homes that were closed on after April 9, 2008 are able to get this credit. However, this tax credit ends on July 1, 2009. You can use the credits on your taxes for both the years of 2008 or 2009 as well.

It's Not Free Money
Although you do get $7500 in tax credits because of the Housing and Economic Recovery Act of 2008, it is important that you realize that it is not free money. This is money that you are going to have to pay back in the future. Many people use it and spend it like it is free money and don't realize that they are going to end up having to pay all this money back in the future. Within two years, buyers are going to have to work on paying back this tax credit, which is essentially a loan. You only have to pay a maximum of $500 each year, and if you do sell your home, the outstanding balance of the loan must be repaid from any profit that you get. However, if you lose when you sell, the government will forgive the difference that you still owe.

You Must Apply After Purchasing a Home
While you may be thinking that you'll be able to get this housing tax credit when you are buying a home, you'll actually find that you have to apply for the $7500 tax credit after you have already made the purchase. So, you won't end up seeing this money for quite some time when you decide to purchase homes.

Learn more about tax credits for first time buyers at http://www.FirstTimeBuyerTaxCredit.net John Mazzara is involved with financial services in the Twin Cities, MN. Officing out of Edina, Minnesota-John is centrally located within the 7 county MN metropolitan area. John owns three separate businesses-a licensed real estate broker associate selling Minnesota real estate since 1986-affiliated with RE/MAX Associates Plus http://www.MinneapolisStPaulHomes.com, an independent CFP-certified financial planner since 1989 with an independent Minnesota financial planning firm-Financial Planning Associates and the owner of a Minnesota mortgage broker firm-Venture Development Inc-specializing ins residential, commercial and investment mortgages If you are looking for someone to help you in the areas of real estate sales/purchase, mortgages, or and/or financial planning and insurance you should call John for a free 1 hour consultation to see if he can meet your needs. 952-929-2577. RE/MAX Associates Plus and Venture Development are located at 7300 France Ave S, Suite 410, Edina, MN 55435