Government Incentive Programs Offer Opportunities—But Be Quick!

Uncle Sam wants you to give the economy a boost. The government is providing incentives to encourage consumer spending. Over the summer, the so-called ‘Cash for Clunkers’ program proved to be extremely popular as the allocated incentive dollars quickly ran out. But there are other opportunities to make changes to your life. And, as consumers learned with the car rebate program, the key is to act quickly.

Home Buyer Tax Credit

If you have never purchased a home (or have not been a homeowner for the past three years), you could qualify for a tax credit equal to 10 percent of a home’s value—up to $8,000—when you buy a principal residence (single-family home, townhome, condo, mobile home or houseboat). It applies to purchases made on or after January 1, 2009 and before December 1, 2009. Any purchases made after December 1 will not qualify.

The credit reduces your tax liability for 2009. If your own tax bill is not as large as the credit for which you qualify, you will receive a refund for the difference. For example, if you earn an $8,000 tax credit and your federal income tax liability for 2009 is $6,000, you would receive a $2,000 tax refund for 2009. To qualify for the Home Buyer Tax Credit, income requirements apply. The limit to earn the full credit is $75,000 for a single person or $150,000 for a married couple filing a joint return.

Visit www.federalhousingtaxcredit.com for more information. You should also consult with your tax advisor to determine the specific impact the program may have on your own tax strategies. Also, make certain that you are financially prepared to handle the expense of owning a home. Along with accepting a long-term financial responsibility with a mortgage, the costs of maintaining and improving your own home can be significant. Be certain your financial house is in order before you make the investment.

Appliance Rebate Program

If you missed out on the chance for a government rebate to trade in your old car, you have the opportunity to take advantage of a different kind of government rebate program.
The Appliance Rebate Program authorizes rebates of $50 to $200 for purchases of high-efficiency household appliances such as clothes washers, automatic dishwashers, refrigerators and freezers. It also can apply to installation of energy-efficient furnaces, central air conditioning systems and water heaters. Only purchases of appliances that carry the “Energy Star” seal will qualify for rebates—that still represents more than half of all newly produced major household appliances in 2008.

While the money for the rebate program comes from the federal government, the appliance rebate program will differ from the car rebate program in a couple of ways. For starters, funds for the appliance rebate program will be distributed by states, so each state may have its own requirements as to how it will administer the program and which appliances qualify. Be sure to check on the specific program for your state. In addition, no trade-ins are required to participate in the program, so you can purchase a new appliance and qualify for the rebate without having to trade in an older version. This opens the door to virtually anybody who may be in the market for a new, qualifying appliance to benefit from the government rebate offer, giving the appliance rebate program a broader reach than the car rebate or first-time homebuyer tax credit programs.

AJ Jugan and Brian Stumpf are financial advisors and Certified Financial Planner™ professionals. Andrew (AJ) can be reached by calling 412-635-5813 or emailing andrew.m.jugan@ampf.com. Brian can be reached by calling 724-799-2782 or emailing brian.d.stumpf@ampf.com.