BACKGROUND
In case you haven't heard, anyone who purchases their first home before December 1, 2009 will receive an $8,000 "tax credit." Even if you don't pay that much in taxes, you'll still receive the $8,000. If you're already getting a refund because too much was withheld by your employer or you estimated too much, you'll get your refund PLUS the $8,000. No kidding! It's literally a gift from the Federal Government, funded by the American Recovery and Reinvestment Act signed into law during February.
Someone who purchased their first home between April 1, 2008 and January 1, 2009 are eligible for (and may have already received) a $7500 "tax credit" that was inaccurately named - actually, it was a loan because it requires repayment over 15 years. But it was an interest free loan, meaning payments won't exceed $500 year. Not as good as the current tax credit, but still a good deal. These ideas are for you, too.
SPENDING YOUR TAX REFUND
Question: How can I spend my tax credit?
Answer: Any way you want to... There are no limitations.
Here are my top 20 suggestions for spending your first-time buyer tax credit (in no particular order):
- Replenish the bank account or investments you liquidated for your down payment and/or closing costs.
- Landscape your yard.
- Build a deck or patio.
- Purchase new appliances.
- Update a bathroom.
- Install new carpet or flooring.
- Replace windows.
- Buy new furniture.
- Pay down your debts.
- Inv
est in your future. - Take a trip.
- Buy a used car.
- Take some classes.
- Go on a shopping spree.
- Install a new roof on your house.
- Put it towards a boat.
- Replace your kitchen cabinets.
- Upgrade your kitchen counter top.
- Buy a big-screen TV and stereo equipment.
- Save it for a rainy day.
Knowing that you have these funds coming to you in less than a year should give you the confidence to buy your first home, even if it is imperfect. You won't have to wait years to save up money to begin making improvements to your home because you'll be receiving this "gift" during your first year.
There are a lot of homebuyers in the market place that would love to have the same "gift," but only first-time homebuyers are eligible. Don't let this opportunity pass by without purchasing a home while this $8,000 tax credit is in effect.
Read more about the $8,000 tax credit on CNNMoney.com
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Margaret Woda is a licensed Associate Broker in Crofton Maryland. She specializes in serving the real estate needs of home owners and home buyers in Anne Arundel, Howard and Prince George's Counties, Maryland, including Fort Meade, Andrews AFB, and the U.S. Naval Academy. If you enjoyed reading this post, check out Focus On Crofton and Your Online Relocation Package for Anne Arundel County.
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Margaret Woda, REALTOR and Associate Broker
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Margaret, can you believe this? I am almost embarrassed to tell you this. My daughter purchased her first home in January. She had her taxes done by an accountant. The accountant didn't ask her, she never thought to say anything, and I know I mentioned it to her. Her taxes were filed without the credit!!!She thought that it had to be on her next years taxes!
So, she is doing an amended tax return. Already has plans to put the money back into the house.
This is the first post I have read about what to do with the money. All others have been talking about getting the money so great post thanks
Great ideas-Are you marketing this to the public. Great campaign for first time buyers
I wish when me and my husband bought our first home that we would have had 8000.00 being given to us. I could have used it many ways!
Margaret, My daughter just got her $8000 rebate and I thought she would kick a few back to her old real estate agent. Boy, was I wrong. Rich
Andrea - FIRE that tax preparer. What an idiot! My daughter got the $7500 tax credit and she's still thinking about what to do with it, but all of these ideas have been discussed.
Charlie - I don't think most consumers realize (1) how easy it is to get and (2) that there are no restrictions on it.
Harry - 'Hadn't done a post here for a while, so I started w/ ActiveRain. But look for something similar next week on FocusOnCrofton.com
Laura - 'Lots of us are saying that. And yet, look at all those qualified buyers who are nesting in their apartments and taking this for granted!
Richard - I feel your pain. My daughter didn't either.
Who couldn't use an extra $8000.00. There are so many great ways this could help buyers and stimulae the economy as well. Great suggestions.
Not a bad idea to reinvest some of that money back into the property on the things that will make a difference in resale value.
Dear Margaret,
I'd say put that back towards a nice fat extra principle payment to the mortgage. Own it faster than originally intended. That's what I woul do.
Great ideas Margaret! It would be great if the homes buyers actually but a little away in savings and invested the other into the home!
Margaret, Many of these buyers are already getting some money back so this should feel like a windfall! I'm starting to see more and more of them buy for this reason. Hopefully it will continue to increase. It's a lot of money to leave on the table!
21. Gift to you agent for doing such a great job finding you your dream house.
Margaret - I like the 'Invest in your future.' That's a little like giving a man a fish vs. teaching a man to fish. We will all have a brighter future if we invest in ourselves and learn to do for ourselves!
Mary
Mary - That IS one of the best ideas, but most first-time buyers won't follow that... what do you think?
Terry - Here, here! I should have included that! Make that #21.
Connie - Isn't it? I think a lot of potential first time homebuyers don't realize they get it automatically, just by filing the right form with their taxes AND there are no rules or limitations about how to spend it.
Terrie - When I made my YouTube videos on this topic, I made one about re-investing in your house and another about doing frivolous things. Hard as I tried, I couldn't make one even a little upbeat when it came to invest in your future, etc. LOL.
Loreena - Good thought! Okay, now we're up to #22...
Bill - That's what I would do, but some people... I did a 90-second video on this very topic for my Wednesday FocusOnCrofton.com blog next week.
John - Boy, I could sure use it! You wouldn't find me leaving it on the table! My daughter has such a long wish-list, she can hardly decide what to do with hers.
I think after this recession, #20 is the smartest thing to do. How 'bout pay it toward the principal wich could fall under #9.
Hi Margaret! I love this post! I have to say, I'm a rainy day girl so, I'd save it!!! I wish I could take advantage of that this year--maybe next year, it will be an option for ALL home buyers! (wishful thinking!)
These are great suggestions for the tax credit. I think the rainy day money is overrated. Go out and spend, thats what Barack wants, right?
Donna - You'll have to check out my two videos on this topic on YouTube. Just look for "mwoda" - Still practicing... trying to make them good enough to use in my blog.
Debe - Not me... I'm a "fix up the property" gal!
John - Yeah, right. He's so busy spending our money that there's not much left for anyone else to buy anything!
Margaret,
All very good ideas. Thanks for sharing.
Ann