Wow... that didn't take long!  The decision to use the $8,000 Tax Credit for First Time Homebuyers as their down payment has been REVERSED.  

The decision has been overturned... FIRST TIME HOMEBUYERS CANNOT USE their $8k tax credit for their down payment. 

I was a big fan of this idea to use the funds towards a buyers down payment, in fact, in my opinion, this should be THE ONLY use for these funds. 

So lets recap, the government is still giving the $8,000 tax credit - That was NOT overturned. (Remember, this is $8,000 cash or $8,000 reduced from your tax liability, not a deduction).  Buyers can get it through an amended 2008 tax return or wait until filing 2009 taxes, at which point, the buyer can use the funds to buy a Rolex, a car, take a vacation, throw a huge party, buy the newest HD flat screen, or perhaps buy that $8k dining room suite they have been wanting.  

HHmmmmm...  is that a smart use of the money?  NO!  Is that what a majority of the buyers will do with it?  If history is an indicator, then YES! 

What would be the smart financial decision to do with the $8,000.  Use the $8,000 tax credit responsibly and pay down your mortgage.  Guess what?  That is exactly what the government just turned reversed!

Did the government forget that the buyer still must qualify under normal FHA or Conventional financing.  We are not back in 2006, we are not loaning money to anybody that can fog a mirror anymore;  we are loaning money to only 'qualified buyers', so where is the harm in allowing the buyers to use these funds for their down payment?  Buyers NOW must qualify under the tighter financing requirements (higher credit score, good job, loan debt, etc).  

Maybe its a 'tracking of funds' issue or 'reporting to the IRS' issue or an 'accounting' issue... come on... just figure it out!  Can it really be that hard? 

Derek Gutting, The Gutting Group / Keller Williams Realty, 317 846-4888 www.Guttinggroup.com