Tuesday, April 7, 2009

About that First Time Home Buyer's Tax Credit

Much press has been given lately to the first time home buyer's tax credit passed as part of the economic stimulus package back in February.

With all of the media attention the previous versions of the tax credit received, it is no wonder that there is a great deal of incorrect information and rumor out there.

Here are the basics:
  • In order to take advantage of the credit, you cannot have owned a home or had an interest in a home in the three years prior to buying this home. If you are married and file jointly, neither spouse can have owned a home during the last three years.
  • The tax credit is for up to $8,000. Other figures were tossed around during the legislative process, but the credit the was passed had an upper limit of $8,000.
  • The credit is figured as a percentage of the home's sale price. If you purchase a home under $80,000, the maximum credit will be fore 10% of the home's value. For any home with a purchase price over $80,000, the maximum credit is $8,000.
  • There are income limits for the tax credit. A person filing singly can make up to $75,000 and receive the full credit allowable, or up to $95,000 and receive a percentage of the allowable credit. Married couples filing jointly can make up to $150,000 for the full credit or $170,000 for the percentage.
  • The home must be your primary residence.
  • You must close on the home on or between January 1, 2009 and November 30, 2009.
  • The tax credit is refundable. That means that if your federal tax liability (the amount you owe) is less than the amount of the tax credit, you will get the excess refunded to you.
If you are looking to buy your first home or to own a home for the first time in three years, this tax credit is wonderful news for you. You can find more detailed, credible information on the tax credit here or talk with your tax preparer.

Between the tax credit, incredibly low interest rates, and the lower prices in the current home inventories, this is a fantastic time to buy a home.

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