FIRST TIME HOMEBUYER TAX CREDIT

04.23.09

Legislation was recently enacted, designed to stimulate the real estate market. Between January 2009 and December 1, 2009, homes purchased by first time homebuyers are eligible for a tax credit of up to $8000. To review it, here are some of the major details.

It is a credit for 1st time home buyers only;

A "FIRST TIME HOME BUYER" is defined as a buyer who has not owned a principal residence during the 3 year period prior to the purchase. For married taxpayers, the homeownership history of both individuals is "tested";

The tax credit does NOT have to be repaid;

The tax credit (amount) is equal to 10% of the homes purchase price up to a maximum of $8000;

The timing for being eligible to receive the credit is the actual CLOSING date of the transaction;

Single taxpayers with a modified adjusted gross income (MAGI) up to $75,000 and married couples with MAGI incomes up to $150,000 are eligible for the full tax credit. For singles earning more than $95,000 (MAGI) and married couples earning more than $170,000(MAGI), the tax credit amount is reduced to ZERO! There is a proportional adjustment for MAGI income levels between the full and zero levels.

Finally, the purchase must be used as a PRIMARY residence for at least 3 full years, or face a recapture of the tax credit amount. If this is fulfilled, there is no recapture/repayment of the credit earned.

This credit is claimed on the federal tax return. Full details about this are available at
federalhousingtaxcredit.com . Finally, there are sure to be scam plans foisted upon the unwary consumer so be very careful and do NOT send any money to anyone requesting same in return for claiming to provide some related service or other information related to this legislation.

©2009 R. Leech features.