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Dissecting Obama's first home buyer tax credit (for mobile homes)

New legislation is always met with skepticism and sometimes excitement, especially on the delicate subject of home ownership in America. With the first time home buyer tax credit, at first glance, what you see is what you get.
In this blog post, I will be trying to lift the veil to show the average American what it means to him or her. This is not a complete description or analysis, and you should speak to your real estate agent and/or broker before making any decisions. Below, I answer the most common questions involving this tax credit.

How much money can you save?

The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000. So, if you are buying a manufactured home for $65,000, then your tax credit will be for 10% or $6,500. Therefore, the only way to redeem the full amount of the tax credit offered is to buy a manufactured home valued at over $80,000. This will mean that in most cases, the only two ways to redeem the full amount of the tax credit will be to purchase chattel and land, or to buy a brand new manufactured home right from the factory. This is because many used mobile homes are not valued over $80,000.

Do mobile home purchases qualify for the tax credit?

Absolutely, any home that will be used as a principal residence will qualify for this credit, including single-family detached homes, townhouses and condominiums, manufactured and mobile homes, and houseboats.
Mobile Homes eligible for this credit are those purchased on or after Jan. 1, 2009, and before Dec. 1, 2009, by a buyer who has not owned a principal residence during the three-year period prior to the present purchase. So, if you have not owned a home in the past three years (or more), and your purchase is complete before December of 2009, then you are eligible for the tax credit on your manufactured home purchase.

Does the tax credit have any limitations?

There’s always going to be limitations to any legislation, and the first time home buyer tax credit is not exempt. The biggest limitation relates to your income. Manufactured and mobile home buyers are limited gross incomes of $75,000 for single taxpayers and $150,000 for married taxpayers filing joint returns. If you exceed these income levels you may still be eligible for a partial tax credit up to income limits of $95,000 (single) and $190,000 (married).

When can you redeem the tax credit?

Wouldn’t it be nice if Uncle Sam would just give you the tax credit right when it was needed most? It is only in a special circumstance that this can happen, most mobile home buyers will have to wait until their tax return is filed. The special circumstance is for HUD-approved nonprofit agencies, who can advance the tax credit to (1) be used in addition to the 3.5 percent required down payment (2) to pay closing costs and/or (3) to increase the amount of down payment. I all other cases, the old saying applies – “A dollar saved is a dollar earned.”

What is the goal of this tax credit?

It is the aim of this program to help families purchase their first homes and help communities like ours that are struggling to deal with an oversupply of available housing. Another large motivation of this tax credit for the president and congress is to try to create a small jolt in the housing and banking industries in a somewhat organic way (rather than handing TARP funds directly to struggling corporations).

Will I get a check if the housing credit is higher than my tax return?

This tax credit does not have to be repaid and is refundable to the taxpayer, unlike the tax credit announced in 2008.If you owe $1,000 on your federal income tax return, and your tax credit amounts the full $8,000, then you can expect a check for $7,000 from Uncle Sam. The manufactured or mobile home buyer credit can be claimed even if the taxpayer has little or no tax liability, and the federal government will send the taxpayer a check for some or all of the refundable tax credit.

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