Here are details and commentary about the first time homebuyer tax credit which our federal government is offering in its infinite largess to qualified buyers. But hurry because the opportunity expires on December 1st, 2009, although it may be extended to April 30th if a new legislative proposal passes in Congress.

first time homebuyer tax credit

Read how to get the perk, who qualifies, see the educational video, and hear an editorial perspective on the wisdom of this program. This is a Right Pundits open talk thread where you can discuss this topic or anything else on your mind.

Listen to the video and confirm the information with a qualified tax accountant and your mortgage provider. With that disclaimer here are the details of this program as we understand them.

You are eligible for an $8,000 tax credit as a “first time” home buyer if you have not previously owned a home for the last three years. If the tax credit is extended to April 30th, 2010 as proposed by the Senate, the amount will lower to $6,500.

For married couples, both the husband AND wife cannot have owned a home for the prior three years. For unmarried co-purchasers, only ONE of the buyers needs to meet the definition.

There is an income limitation credit where the credit begins to be reduced. For married couples the credit is lessened at the $150,000 threshold while the limit is reached at $75,000 for single couples. In the new proposal, these limits would increase to $250,000 and $125,000, respectively.

The opportunity applies to homes purchased between January 1st 2009 and December 1st 2009 although there is talk that it may be extended. It applies to both newly constructed and used homes. It must be your principle residence rather than an income-producing, investment property.

And it is a tax credit rather than a deduction which means that you would receive a tax refund even if you paid no taxes at all. That is a good deal for anyone who qualifies.

This is our understanding of the first time home-buyer tax credit. You should confirm all details with a qualified accountant and read the official information from the IRS which is here, and more information from the National Association of Homebuilders which is here.

Now the commentary.

Like all government programs this gambit is well intentioned. The purpose of the tax credit is to stimulate demand and stabilize the housing market. 40% of home purchases are by first time home buyers, so that is a lot of demand and a lot of economic stimulation.

Unfortunately the benefits exceed the costs. The first time homebuyer tax credit is another Democrat-enabled pork barrel program aimed to please and win more voters. First time home buyers tend to be young. Young people tend to vote for the donkey party. You get the picture.

The bottom line is we are spending still more money which our society does not possess, so it will be heaped upon the backs of our children and the children of these first time home buyers.

This boondoggle program reminds us of the perils of a single-party government. What we’ve learned over the past two administrations is that a single part in charge of the executive branch and both legislative arms of government means that our elective leaders will spend like drunken sailors. Divided government is always the most fiscally responsible. The current and prior administrations will go down in history as reckless.

Nevertheless we have a fat new program so take advantage of the first time home-buyer tax credit if applicable to your situation. Now we invite reader comments on the benefits and costs of this program, or anything else you want to discuss after viewing the video.