September 22nd, 2009 4:13 PM by Heather Brown
Do you understand the First Time Homebuyer Credit?
At a Glance:
Here are some answers to frequently asked questions:
If I've owned a home before, does that mean that I am not eligible for the the first time home buyer tax credit?
As long as it has been three years since you have owned a home, you are considered a first-time home buyer. For Married taxpayers, the law tests the home ownership history of both the home buyer and his/her spouse.
Do I really get up to $8,000, or is it just a tax deduction?
It really is up to $8,000 - cash in your pocket! You get the money when you file your tax return. The home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.
How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008?
The most significant difference is that this tax credit does not have to be repaid. Because it had to be repaid, the previous "credit" was essentially an interest free loan. This tax incentive is a true tax credit. However, home buyers must use the residence as a principal residence for at least three years or face recapture of the tax credit amount. Certain exceptions apply.
I've been thinking about buying, how much time do I have?
The Program ends November 30th. Now is the time to buy!
How do I claim the tax credit?
Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. No other applications or forms are required, and no pre-approval is necessary.
Who is Eligible to claim the tax credit?
First time home buyers purchasing any kind of home new or resale are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and before December 1, 2009. for the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner.
What types of homes will qualify for the tax credit?
Any home that will be used as a principal residence will qualify for the credit. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes/mobile homes) and houseboats.
Are there any income limits for claiming the tax credit?
Yes. The income limit for a single taxpayers is $75,000; the limit is $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single tax payers and $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.
If you hire a contractor to construct a home on a lot that you already own does it still qualify for the tax credit?
Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been "purchases" on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after Jan.1, 2009 and before Dec.1, 2009.
With up to $8,000 in tax credit, today's low interest rates and the best prices in years................ it may be the best time ever to buy a home.
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