First-Time Homebuyer Federal Income Tax Credit
The first-time homebuyer credit is effective for purchases on or after January 1, 2009 and before December 1, 2009.
The amount of the homebuyer federal income tax credit is the lesser of 10% of the cost of the home bought or $8,000. Any single-family residence my be an eligible property under the homebuyer income tax credit, provided it will be used as the homebuyer’s principal residence.
This homebuyer income tax credit reduces income tax liability. The $8,000 tax credit is a clean refundable credit, unlike the one that was passed last summer, which required a repayment. If you qualify as a first-time buyer (haven’t been a homeowner in the past 3 years), then you can claim the $8,000 to reduce your tax burden. If the $8,000 is greater than the tax you owe, then you will get a refund check for the difference.
In order to be eligible for the homebuyer income tax credit in full, the homebuyer can have an annual adjusted gross income of no more than $75,000 ($150,000 on a joint return). A homebuyer with an annual adjusted gross income above that level and up to $95,000 ($170,000 on a joint return) is eligible for a reduced tax credit.
The homebuyer income tax credit is designed for first-time homebuyers, which means the homebuyer (and/or the homebuyer’s spouse) can not have owned a principal residence in the 3 years prior to purchase of the eligible property.
There is no repayment of the homebuyer income tax creidt by the homebuyer. However, if the elibible property is resold within three years of purchase, the entire amount of homebuyer income tax credit is recaptured on the sale.
The First-Time Homebuyer Federal Income Tax Credit is effective for purchases on or after January 1, 2009 and before December 1, 2009. This information reflects a modification from the First-Time Homebuyer Federal Income Tax Credit, which remains in effect for homes purchased by eligible homebuyers between April 9, 2008 and December 31, 2008.
Seek advice from a professional tax advisor for specific tax calculations and timing for claiming the tax credit.
Source:Â Based on information provided by the National Association of Realtors.
This entry was posted on Monday, March 16th, 2009 at 10:18 am and is filed under Home Buying. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.