There are only a few weeks left for first time homebuyers to take advantage of a federal tax credit.
The first time homebuyer tax credit was part of the Home Economic Recovery Act.
"At the time it was to stimulate the economy, to get the homebuyers back into the housing market. The housing market started to decline so it was sort of an incentive for people to get out there and still purchase properties,” said Wendy Pang, senior vice-president of Central Pacific Homeloans.
Pang says the tax credit has acted as a motivational factor for a number of first time homebuyers. There is a slight difference between homes purchased in 2008 and 2009.
"If you've purchased a home in 2008, it operates much like an interest free loan which means you need to repay the tax credit back over a 15 year period. In 2009, if you purchased a home, you don't have to repay it as long as you stay in that home for three years after you've purchased it,” she said.
There is another subtle difference between 2008 and 2009.
For example, if you purchased your home after April 8, 2008.
"The maximum is $7,500. That means you would have to purchase a home that's $75,000 or more which is not that much in Honolulu. And for 2009, the tax credit was increased to $8,000,” she said.
And remember, the home must be your primary residence for three years after the purchase. The term first time homebuyer may be misleading.
If you have not owned a home for three years, been renting or leasing, you are still eligible to be a first time homebuyer.
But the deadline to purchase is fast approaching.
"The home needs to be purchased for the 2008 tax credit after April 8, 2008. And for the 2009 tax credit the expiration date is December 1st, 2009 which means you need to record on a home by November 30th, 2009,” she said.
