I continue to get questions from my clients regarding the recently extended & expanded homebuyer tax credit, so I thought I would provide readers with a brief overview...Who qualifies as a First Time Home Buyer?
For the purposes of the tax credit program, a first time homebuyer is anyone who has not owned a primary residence in the previous 36 months. The credit for FTHBs is 10% of the purchase price with a maximum available credit of $8,000. This applies to single taxpayers and married couples.
Who qualifies as a Current Owners?
The tax credit program now gives those who have owned and occupied a primary residence for a period of five consecutive years during the last eight years an incentive in the form of a tax credit of up to $6,500. Single taxpayers and married couples filing a joint return may qualify for the full credit amount.
What are the New Deadlines?
In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.
What are the Income Caps?
The amount of income someone can earn and qualify for the full amount of the credit has been increased. Single tax filers who earn up to $125,000 are eligible for the total amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn more than $245,000 are ineligible.
What is the Maximum Purchase Price?
Qualifying buyers may purchase a property with a maximum sales price of $800,000.
What is a Tax Credit?
A tax credit is a direct reduction in tax liability owed by and individual to the IRS. In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 26 months of ownership is no longer and individual’s primary residence.
A tax credit is a direct reduction in tax liability owed by and individual to the IRS. In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 26 months of ownership is no longer and individual’s primary residence.
Want to learn more?
For more detailed information, please visit the IRS or NAHB websites. I also recommend that you check out this whitepaper, which addresses many of the questions my clients have been asking.
For more detailed information, please visit the IRS or NAHB websites. I also recommend that you check out this whitepaper, which addresses many of the questions my clients have been asking.
Note: This information is not intended as tax or financial advice. It is strongly recommended that you consult with your tax and financial advisor prior to making any decisions about your tax situation.
