First Time Home Buyers can take advantage of the $8,000 Tax Credit. Of course there are a few rules which govern this.
• The deduction is worth 10 percent of a home’s value up to $8,000. All homes worth more than $80,000 could qualify for the maximum amount.
• Income limit qualification. A married couples’ modified adjusted gross income (MAGI) should be under $150,000 and single filers’ MAGI should be less than $75,000.
• Partial tax credits may be available for married couples with MAGI incomes over $150,000 but under $170,000 and single filers with incomes over $75,000 but under $95,000.
• Married couples filing separately can both claim 5 percent of the home purchase ($4,000 each for a home over $80,000) on their tax returns.
• Not a deduction but a Tax Credit. The entire amount goes back to the first-time unlike deductions, such as mortgage interest, that are subtracted from gross income before tax is calculated. If qualified for $8,000, the buyer gets $8,000, even if they do not owe that much in taxes otherwise.
• Tax credit applies to homes purchased between Jan. 1, 2009, and Dec. 31, 2009.
• Tax credit does not have to be paid back, providing the homebuyer keeps the property for at least 36 months and resides in the home.
• To qualify as a first-time homebuyer, the purchaser cannot have owned a home within the previous three-year period. However, ownership of a vacation home or rental home does not disqualify the buyer.
• 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.
• 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 the same day that President Obama signs it into law, fill out their income tax forms the next day, and receive the tax credit fairly quickly. 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. If they owe more tax than the amount deducted, they pay the IRS; if they owe less, they get a tax refund. 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.
Keeping you up to date with First Time Home Buyers information. Tampa Luxury Consultant, Realtor Phil Fowler of Keller Williams Realty,
813-401-8078 or email Phil@PhilFowler.com
