What you should know about the
First – Time Homebuyer Tax Credit
Brought to you be Homestead Realty.
The American Recovery and Reinvestment Act of 2009 features an $8,000 tax credit for first-time buyers who purchase a home on or after January 1, 2009 and before, December 1, 2009.
* The temporary credit is only available
for home purchases made from Jan. 1, 2009
to before Dec. 1, 2009 and is equal to 10%
of the cost of the house, up to a maximum
credit of $8,000. (For example, a home
purchased for $80,000 or more would qualify
for the full $8,000 credit, while a $70,000
home would qualify for only 10%, or $7,000.)
* Buyers claim the credit on their federal tax
return to reduce their tax liability. If the credit
is more than their total tax liability that year,
the buyer will receive a refund check for the
balance.
* Only first-time homebuyers can take advantage
of the tax credit. A first-time buyer is defined
under the tax credit as an individual who has
not owned a home in the last three years. For
married joint filers, both must meet the first-
time homebuyers test to take the credit on a
joint return.
* Eligible properties include anything that will
be used as a principle single family residence-
including condos and townhouses.
* There are income guidelines on the credit.
Individuals with an adjusted gross income up
to $75,000 (or $150,000 if filing jointly) are
eligible for the full tax credit. The credit is
phased down for those earning more and is not
available for those with an income above
$95,000 (or $170,000 if filing jointly.)
* The new tax credit does not have to be repaid
if the buyer stays in the home at least three
years. If the home is sold before that, the
entire amount of the credit is recaptured on
the sale.
* People who purchased homes under the 2008
$7,500 tax credit program will still be required
to repay the credit to the government over a
15-year period.
Consult with Homestead Realty or your tax advisor to learn more about the tax credit and state and federal loan programs.