My girlfriend and I have been renting houses and apartments in the Triad area for over two years now. We’ve always talked about buying a cute little fixer-upper and throwing ourselves into rehabbing it to its 1940s bungalow glory. In September my girlfriend was supposed to be going to England for school, but unexpectedly last month the university canceled the program to international students. With little time to form alternate plans (or apply to other programs), our jobs are coming to and end, our lease will be up and we have had to play things by ear.
In September we will move in with my family outside of Charlotte and piece things back together. We’ve lived in various parts of the same town for 6 years now and I know I’ve started to mourn the loss of familiarity. We’ll be moving away from our home of over half a decade. As we’ve been packing and cleaning and catching folks up on our change of plans, my girlfriend has been re-thinking grad school and the program she’d like to begin. Her focus has shifted and a new program has opened up doors around the country to her; now she can take her time choosing just where she’d like to be (and where we both might like to live for the next half decade!).

This change in perspective has led us back to our dream of buying a little run-down place to polish up for ourselves. With one of us in school and the other hoping to make ends meet as a freelance designer, we’ve spent the past week crunching numbers and aligning our goals with our financials. We’ve walked through a few houses on the market and spent hours poring over Zillow and Craigslist. You may well see us back in the Triad in the next year!
Ultimately, my point is two-fold:
First, if you are a freelancer or creative type, don’t discount your desires to own your own home! Buoyed by this post from Freelance Switch, I went confidently into houses on the market and didn’t second-guess myself.
Second, this is a great time to get into the first-time home buyer game. No matter how much you have been following the housing crisis across the country or how well you manage to sock away savings each month, when you look at the paper or the for-sale listings, you’ll see bright red reduced price stamps everywhere. Foreclosed homes are popping up everywhere and if you do your research (and you must) you can find some absolute steals.
If you are a first-time buyer, you should be aware of a recent tax credit Bush has approved for you as a first-timer. No, really, Bush did something that might give you a boost instead of a headache! This next bit here to explain how this can help you is taken directly from “Give Us a Break: New Tax Credits for Homeowners”:
The new housing reform law did throw in a benefit to those who take the standard deduction. Even taxpayers who take standard deductions will be able to subtract property taxes from their taxable income (up to $1000 for married couples and $500 for others). Add this credit to the $7500 first time homebuyer tax credit and you get at least 8000 reasons to buy this year if you can swing it.
For the less affluent, the fact that the $7500 is a refundable credit is critical. The credit isn’t even available for single taxpayers whose AGI exceeds $95,000 and married couples with an AGI over $170,000. But even people who pay little or no tax benefit from this credit. For example, Joe Paycheck has $2,500 in federal taxes withheld from his salary during 2008. His tax bill for the year is $3,000. Normally, Joe would have to cut the IRS a check for $500 on April 15th. But in 2008 Joe became a first time home buyer. So he’s eligible for a $7,500 tax credit. Instead of paying the IRS $500, Joe gets a check for $7,000 (the $7,500 credit minus the $500 owed). Not bad.
There is a little catch. The credit gets repaid to the IRS over time ($500 per year for 15 years). If the home is sold before then, the unpaid credit would be repaid from the profit of the home sale. If there isn’t enough profit from the home sale, the credit is written off and the IRS doesn’t get repaid. So a first-timer could buy a house, live in it for a couple of years and sell it, and even if there was no profit on the deal the seller would be $6,500 ahead (the $7500 credit less the $1,000 repaid over two years). So there is a sizable upside to the process. If considering a first time home purchase, check with a tax pro for the whole scoop on the new tax credits. Then check with a lender to see if you can afford to become a first time home buyer.”
Crunch your numbers. Check out the market in your area or an area you’ve always loved. Don’t get bogged down in freelancer month to month income, be it sporadic or steady. It’s few and far between the benefits Bush has dug up for the average American, but this is one that could really help you along. Take advantage of it while you can!
For more information on the tax reform law and the $7,500 tax credit look here.
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