First-Time Homebuyer Tax Credit… You may qualify
The Real Story …
News and commentary about the real estate market and related topics.
Dave Parrish, ABR ®, CRSA, CSP, GRI, ePRO ®, REALTOR ®, RealtySouth
For an archive of The Real Story visit:
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First-Time Homebuyer Tax Credit…
You may qualify
The clock is ticking away toward the end of the most phenomenal incentive ever for the First-Time Home Buyer. Think you DON’T qualify… Wait… You may be eligible even if you have previously owned a home. The government’s definition of a first-time home buyer is anyone that has not owned a home in the past three years (thirty-six months).
In one of the more meaningful attempts to stimulate the economy, the federal government has created a program that impacts one of the largest economic sectors, puts people back to work and makes homes even more affordable for that group that they define as first-time homebuyers.
Tax Credit Provides Outstanding Opportunity for Home Buyers
In a nut shell the American Recovery and Reinvestment Act of 2009 provides the following: A refundable tax credit of up to $8,000 is available for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009.
Program Highlights:
- The tax credit is for first-time home buyers only. For the tax credit program, the IRS defines a first-time home buyer as someone who has not owned a principal residence during the three-year period prior to the purchase.
- The tax credit does not have to be repaid if the purchaser remains in the home for at least thirty-six months.
- The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
- The credit is available for homes purchased on or after January 1, 2009 and before December 1, 2009. Note: The effective dates apply to the date the transaction is completed, that is the date of the closing.
- Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit. Tax payers with incomes above these levels are eligible for a reduced benefit based on their Modified Adjusted Gross Income (MAGI). The phase-out range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.
A reminder this is a refundable tax credit not a tax deduction. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes rather than a percentage based on your individual tax rate. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS.
The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even the entire amount of the refundable tax credit.
Now I must caution you that there are many other details and finer points to this program … much-to-much detail for our limited space; and as always, you should consult your tax professional to see how the tax credit works in your specific case.
This is a truly advantageous program for the first-time home buyer that when combined with the great selection of homes available today, lower home prices and near record low interest rates creates an unparalleled opportunity for those who wish to become homeowners.
Get the full story at the following web site (a service of the National Association of Home Builders / NAHB):
http://www.federalhousingtaxcredit.com
or from the IRS site accessed via the following url:
http://www.irs.gov/newsroom/article/0,,id=204671,00.html
For those of you interested in more details on the tax credit and other issues of importance to First-Time Home Buyers, you may want to attend a FREE First-Time Home Buyer Seminar being held at the new Trussville Civic Center this Thursday, August 20th at 6:30 PM or contact a Realtor.
