First Time Home Buyer Tax Credit Information
The first-time home buyers tax credit is now part of the Stimulus Package. There are many misconceptions floating around regarding the issue. Here is a short explanation and answers that may help:
- This tax credit plan is for first-time homebuyers only. The definition of a first-time homebuyer in this instance is any family unit who has not owned a home as a principle residence within the past 3 (three) years.
- For those who utilize the 2009 tax credit, they will not have to repay it! This differs from the previous first-time homebuyer tax credit in place for 2008. If you took advantage of this 2008 plan, the tax credit was an interest free loan to be repaid within 15 years. Just to clarify - if you take advantage of the first-time homebuyer tax credit after the year 2008, then you will owe nothing back! The only stipulation is that the first-time homebuyer must keep their principle residence for at least 3 years or the consequence of recapturing the tax credit amount utilized will have to be paid back.
- The amount of the tax credit that you receive is equal to 10% of the purchase price of the residence, with a maximum of $8000.
- Here are the differences between a tax credit and tax deduction: The tax credit is a dollar for dollar amount that is paid against taxes that are owed. A tax deduction is a reduction in the amount of gross income by the tax deduction amount. So, in this first-time homebuyer tax credit, it would be considered post tax. In 2009 there is an added benefit - if you do not owe taxes larger then the amount of the tax credit, then you will receive a check for the difference! That's kinda cool, no?
- The time frame for this tax credit is between January 1, 2009 and December 1, 2009. You must (have) purchase the primary residence during this time frame to receive the credit.
- There is a maximum amount of income in order to qualify. There are some provisions for a partial tax credit if you make more than these amounts: Single Tax Payers AGI (adjusted gross income) must be less than $75,000. Married, filing jointly - AGI must be less than $150,000.
- More information is available at http://www.federalhousingtaxcredit.com. I advise you to contact your tax advisor or specifics on how this tax credit applies to you.
I hope you find this helpful, and as always I am thankful to be of service. If I can help with any of your real estate needs, please don't hesitate to contact me at your convenience.
Tara Melech, Keller Williams Realty, (843) 907-8787