A tax credit of up to $8,000 is now available for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009. Unlike the tax credit enacted in 2008, the new credit does not have to be repaid. Here are some salient points about the tax credit:
1. It really IS like $8,000 in your pocket! Many people are unsure about the difference between a tax deduction and a tax credit. This is a TAX CREDIT, so it is subtracted directly from your Federal Tax bill. And it is a refundable credit so if $8,000 is more than the tax you owe, you can get the difference in cash
2. You need to move quickly: The tax credit is limited to purchases that close between January 1 and November 20, 2009.
3. You can be a first time homebuyer a second time: As long as you have not owned a home in the last 3 years, you qualify as a first time homebuyer.
4. You can get the cash this year: The tax credit can be claimed on your 2008 or 2009 tax returns. If a buyer is likely to complete a purchase in the next few months, they can defer filing their 2008 taxes until they close escrow on the new purchase so that the $8,000 can be credited this year rather than next.
5. This tax credit is targeted to moderate income buyers: The credit begins to be reduced for single buyers above $75,000 in gross income and couples who earn more than $150,000 in gross annual income.
6. Property flippers/ investors need not apply: To realize the credit you have to buy a primary residence and live in it for 3 years (otherwise you will have to pay the credit back).
In short, this is a GREAT tool for new homebuyers to extend their buying power. For more details, you can point your browsers to: http://www.federalhousingtaxcredit.com/
Have questions? I am happy to do my best to answer them… just drop me a line.
