If you’re considering buying your first home, it’s a great time to buy-and it just got even better! Thanks to the federal government’s stimulus package, first-time buyers are entitled to a tax credit lesser of 10% of the cost of the home or $8,000.
The new credit is an $8,000 refundable tax credit (or up to 10% of the purchase price). Refundable means that if your total tax liability in the given year is less than $8,000, the IRS will send a refund check for the balance.
• If you owe $5,000 in taxes, the credit eliminates your tax liability, and you’ll receive $3,000 back (assuming you bought a house worth more than $80,000; it is 10% of the purchase price up to $8,000).
• If you have no tax liability, you get $8,000.
• If you are due a refund of $1,000, you get $9,000 total back. Please consult your tax advisor regarding your specific situations.
• If you utilize revenue bond financing, you can use the tax credit.
• There’s no repayment as long as you don’t sell the home within three years of purchase. If you choose to do so, the entire amount of credit is due back to the government at the time of sale.
• You cannot buy your home from a close relative such as a spouse, parent, grandparent, child or grandchild.
• It can be claimed on your 2008 Tax Return (to be filed by April 15, 2009), an amended 2008 Tax Return, or your 2009 Tax Return.
• You must be a first-time homebuyer. If you (and your spouse, if filing jointly) haven’t owned a principal residence in the past 3 years, you qualify.
• You must purchase a single-family home that will be your primary residence (meaning you spend 50% or more of your time there) between Jan. 1 and Dec. 1, 2009. This includes condos, townhouses and co-ops.
• It must also be in the U.S.
• The full amount of credit is available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). It begins phasing out after those numbers and completely disappears at income levels of $95,000 and $170,000 on a joint return.
Now is a great time to buy! Consult a tax advisor to see how the credit impacts you personally. To find your perfect home, contact your favorite Real Living Realty Experts agent today, or visit www.HomesByRealLiving.com