FIRST TIME BUYER CREDIT CAN INCREASE TAKE HOME PAY

The big buzz in real estate right now is all about how the first time buyer tax credit. No one has quite figured out how it can be monetized to become available to purchasers at the time of closing. HUD has repeatedly issued and rescinded guidelines on this matter and we are still waiting for the lending industry to figure it out.

Consider this alternative approach. Qualified buyers may elect to wait to receive the tax credit until they file their 2009 tax return. Meanwhile, with the knowledge that they will be receiving the credit against their income tax liability currently accruing throughout 2009, one may choose to claim fewer income tax exemptions for withholding purposes. This is done by simply filing a revised W-4 Form with their employer.

This strategy would effectively monetize the tax credit throughout the balance of 2009 by increasing the take home pay in every first time buyer’s weekly paycheck for the rest of the year. Some or most of this increase could also be retained in future years due to the ongoing income tax benefits provided by home ownership.

Individual circumstances will vary based on income and allowable exemptions, but for many this may be the perfect way to take advantage of what is undoubtedly the best market for first time buyers ever. And remember, first time buyers include those that haven’t owned a home for at least three years. Check with your Weir Manuel trusted advisor and your tax accountant to learn how this strategy may work for you.