First Time Home Buyer $8000 Tax Credit

Tax Credit at a Glance
• The tax credit is for first time home buyers or those who have not owned a home for the past 3 years.
• The tax credit does not have to be repaid. It’s a tax credit, not a tax deduction, if you qualify for $8,000 you get $8,000.
• 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.
• Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit. Those with higher incomes may qualify for a partial tax credit.
For more detailed information and an extensive list of frequently asked questions, click the following link: http://www.federalhousingtaxcredit.com/2009/faq.php

Other Considerations:

• The tax credit can be claimed on 2008 income tax forms even though the purchase took place in 2009. A buyer could close on a home today, fill out their income tax forms the next day and receive the tax credit fairly quickly. Click on the link above for more details, and consult with your accountant.

The tax credit is not a down payment, but it could be used toward a down payment if first-time homebuyers plan ahead. U.S. taxpayers have money withheld from every paycheck for income taxes. By anticipating at least an $8,000 refund in early 2010 when they file 2009 taxes, these buyers could cut down on their tax withholding this year and save the money toward a down payment. There is one caveat, however: Should they not buy a home in the qualifying period, they would still owe the IRS the money, and reducing their withholding amount could result in a high bill at tax time. Click on the link above for more information.

• If purchasing a new home, the effective date to receive the credit is the first day the homeowner actually lives in the house. If construction began in 2008, that buyer could still qualify. And if construction begins in 2009 but the owner does not take possession until 2010, the buyer would not qualify.