This new incentive, which will be brought about by the Obama administration’s economic stimulus bill, may be just what some first time home buyers have been waiting for. In addition to the historically low interest rates and the most affordable housing levels since 1973, first time buyers may now be able to enjoy yet another benefit to jumping into the real estate market in 2009.
Highlights of the $8000 Tax Credit:
*This tax credit is significant in that it will be applied to tax owed (if any) with the balance being returned to the tax payer in the form of a refund check. For example if the tax payer owes $1000 in taxes, the tax credit will be used towards the amount owed and the balance of $7000 will be issued to the tax payer as a tax refund check.
*First time home buyers are defined as those not having owned a principle residence (does not include a vacation property) for 3 years prior to their home purchase in 2009.
*Home purchase must be made between January 1, 2009 – November 30, 2009.
*First time home buyers’ modified adjusted gross income must not exceed $75,000 for an individual and $150,000 for a married couple. However, tax payers with income exceeding these limitations may be eligible for reduced credits.
*Maximum tax credit is 10 percent of the purchase price and not to exceed $8000. Therefore any home purchases exceeding $80,000 will be capped off at an $8000 tax credit.
*The $8000 cap applies to an individual or to individuals purchasing a home together. For example, a married couple filing separately, and purchasing a home together, will each claim a $4000 tax credit. Likewise for all persons who will be purchasing a home together. They must all qualify as first time buyers and the total tax credit will be capped off at $8000, where it will then be divided amongst themselves to be claimed on their tax returns.
*This tax credit does not need to be paid back if the buyer owns the property and maintains it as their primary residence for at least 36 months from the purchase date.
First time home buyers may claim this tax credit using IRS Form 5405 available at http://www.irs.gov/pub/irs-pdf/f5405.pdf. According to the IRS, qualifying tax payers may claim the $8000 credit on either their 2008 or 2009 tax returns.
Leave A Reply With Facebook