With so many properties falling into foreclosure and so many families unable to care for their homes any longer, buyers are picking up more and more REO and foreclosed properties that are in need of some TLC.  While buyers and investors have the money to buy, they may not always have the money to fix so seeking out government programs to help get those foreclosed purchases into living condition is a smart and easy move.

There are currently two such government incentives available.  The first is the federal government’s rehabilitation tax credit.  This incentive offers credits that reduce taxes to allow buyers to pay for expenses associated with renovating, rehabilitating and reconstruction of certain buildings.  What’s the catch? This credit is for building build before 1936 and buildings that are certified historic structures. 

While older buildings are not always what young investors or even those in search of starter homes are looking for, it is a pretty big chunk of change to consider.  Consider if you spend $30,000 in renovations on a historic home, you would save $3000 in taxes on the same property.  Also, in more cases than not, a structure built pre-1936 has likely had many renovations done over the years too.  Some properties already offer updated plumbing, heating and electrical situations and may now need other areas addressed.  Oftentimes state or local governments will offer additional incentives, grants or interest rate offers for restoring and caring for historic buildings too.

If you are totally against purchasing a home that is quite so classic, HUD also provides great incentives for investors and buyers willing to rehabilitate affordable housing.  Not all HUD homes are fixer uppers, but in most cases, the good HUD homes go quick.  But HUD homes in need of repair provide great opportunities as well.  For starters, with HUD homes, you are likely already saving a bundle just on the purchase.  HUD requires low down payments and offers great low interest rates on their properties. 

HUD also works with FHA to provide the FHA 203k loan that provides qualified several buyers with options for reduced costs depending on the type of home they purchase and the terms with which they plan to use the home.  You can learn more on the HUD website:  http://www.hud.gov/offices/hsg/sfh/203k/203kabou.cfm.