There has been a lot of excitement and confusion about the new tax credit enacted by the Obama administration for first time home buyers. Here are answers to some of the more commonly asked questions.
The tax credit amount is determined by the lowest personal income tax rate of the year times $5000. For instance, 2009’s lowest rate was 15%. Multiplied by the amount of $5000, this equals $750. So, for 2009, the HBTC is $750. Each year, the credit is recalculated, so it may be higher or lower than previous years.
The results that have been seen since this program was instilled so far have been fairly dramatic; housing prices have started to rise and it is estimated that up to 350,000 sales will take place during the period of January 1st to December 1st that would not otherwise have been made. The increase in sales is helping to support some higher real estate prices; for every home that's sold instead of being foreclosed on the value of the homes around it are supported as well.
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