Can you use $8000?
Well the government is willing to give it to you to buy a house!
The federal tax credit is actually available for anyone purchasing a home that has not owned a principal home in the previous 3 years. Note they call it a “first time home buyer tax credit” but it does not mean you are purchasing a property for the first time!
There are certain limitations and criteria that you must meet in order to be eligible for the tax credit:
1 The deduction is worth 10% of the home’s value up to $8,000 (this means that every house valued over $80,000 can qualify for the maximum amount).
2.Income qualifications:
a) A married couple’s modified adjusted income (MAGI) should be under $150,000.
b) A single filer’s income should be less than $75,000
c) Partial credits may be available for married couples with MAGI incomes over $150,000 but under $170,000.
d) Partial credits may be available for single incomes over $75,000 but under $95,000.
e) If a married couple files individual returns, they can both claim 5% of the home purchase ($4000 each if home value is over $80,000) on their tax returns.
3. This is a tax credit not deduction. This means the entire amount goes back to the “first time homebuyer” unlike other deductions like interest on your mortgage which is deducted from gross income before tax is calculated. If you qualify for the $8000 credit, you will get $8000 even if they would not owe that much in taxes.
4. The tax credit applies to homes purchased from Jan 1, 2009 through Nov 30, 2009.
5. The tax credit does not have to be paid back, as long as the Buyer keeps the home for at least 36 months and resides in the home. This means you must make this your principle residence for 36 months in order to keep the credit.
6. To qualify, as a “first time Buyer” the purchaser cannot have owned a home within the previous three years. However ownership of a vacation home or rental home does not disqualify the Buyer.
7. The credit only applies from the day the Buyer takes possession of the property. For example if you purchase a pre construction home between Jan 1, 2009 and Nov 30, 2009, but you do not take possession until Jan 2010 you will not be eligible for the credit.
8. The tax credit can be claimed on 2008 income taxes even if you purchase the property in 2009.
Well the government is willing to give it to you to buy a house!
The federal tax credit is actually available for anyone purchasing a home that has not owned a principal home in the previous 3 years. Note they call it a “first time home buyer tax credit” but it does not mean you are purchasing a property for the first time!
There are certain limitations and criteria that you must meet in order to be eligible for the tax credit:
1 The deduction is worth 10% of the home’s value up to $8,000 (this means that every house valued over $80,000 can qualify for the maximum amount).
2.Income qualifications:
a) A married couple’s modified adjusted income (MAGI) should be under $150,000.
b) A single filer’s income should be less than $75,000
c) Partial credits may be available for married couples with MAGI incomes over $150,000 but under $170,000.
d) Partial credits may be available for single incomes over $75,000 but under $95,000.
e) If a married couple files individual returns, they can both claim 5% of the home purchase ($4000 each if home value is over $80,000) on their tax returns.
3. This is a tax credit not deduction. This means the entire amount goes back to the “first time homebuyer” unlike other deductions like interest on your mortgage which is deducted from gross income before tax is calculated. If you qualify for the $8000 credit, you will get $8000 even if they would not owe that much in taxes.
4. The tax credit applies to homes purchased from Jan 1, 2009 through Nov 30, 2009.
5. The tax credit does not have to be paid back, as long as the Buyer keeps the home for at least 36 months and resides in the home. This means you must make this your principle residence for 36 months in order to keep the credit.
6. To qualify, as a “first time Buyer” the purchaser cannot have owned a home within the previous three years. However ownership of a vacation home or rental home does not disqualify the Buyer.
7. The credit only applies from the day the Buyer takes possession of the property. For example if you purchase a pre construction home between Jan 1, 2009 and Nov 30, 2009, but you do not take possession until Jan 2010 you will not be eligible for the credit.
8. The tax credit can be claimed on 2008 income taxes even if you purchase the property in 2009.
It is important to note that the tax credit is not a down payment. However, if you know you are definitely purchasing between Jan 1 2009 and Nov 30 2009 and you are a US Taxpayer who has money withheld from their paychecks for income taxes and you owe more tax then the amount deducted you can pay the IRS: but if you owe less you can get a refund. If you could anticipate at least an $8000 refund in early 2010 when you file your 2009 taxes, you could technically cut down on your tax withholding this year and save the money toward a downpayment. There is one important caveat to remember – if you don’t purchase a home in the qualifying period you would still owe the money to the IRS, and not withholding can lead to a high bill at tax time.
You can visit the IRS website to learn more: IRS HOMEBUYING CREDIT
To check out neighborhood properties click here: Buy A Home
1 comment:
I really enjoyed your post. It's something quite easy to understand--all the other articles about the First Time Home Buyer Tax Credit were very technical and difficult to understand, even for me. So thanks!
-Imee
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