I wanted to put together a short post for you First Time Home buyers out there.  I'm know that you have been bombarded with Stimulus Bills and Packages just like I have.  It can get real confusing trying to sort out the fact from fiction.  Fact-President Obama passed a first time home buyer credit which was included in the American Recovery and Reinvestment Act that was signed into action on February 17th 2009.

Fact-This is a tax credit unlike the previous 2008 plan which was more like a 15 year interest free loan that had to be paid back.  You do not pay this back.  This is your money.

Fact-The maximum amount of tax credit that you may receive is equal to 10% of the purchase price of your home not to exceed $8000.00 (which is the max).

Fact-A tax credit is a dollar for dollar benefit to you the tax payer, not a deduction that decreases your taxable income. (Please consult your accountant)

Fact-There are income limits in place.  A single home buyer with a modified adjusted gross income of $75,000.00 or less is eligible. 

Fact-Married couples with modified adjusted gross income of $150,000.00 or less are eligible.

Question?  What is modified adjusted gross income?  Modified adjusted gross income or (MAGI) as you will sometimes see it is your adjusted gross income (AGI), modified by various adjustments.  Which adjustments?  (Please consult your accountant)

Fact-The tax credit is retroactive to January 1, 2009 and runs through December 1st 2009. (Please consult your accountant)

Fact-It is true and if you already filed your 2008 tax return, which most of you probably have...you can amend your return and still receive the credit this year.  (Please consult your accountant)

Fact-This program is for what they define as First time Home Buyer.  What is the definition of a first time home buyer?  Good question.  A first time home buyer is defined as any tax payer who has not owned a primary principal residence within 3 years of your new home purchase.  What is a primary principal residence?  Another good question.  Your primary principle residence is where you live.  Not your Aunt, or your Cousin, where you sometimes may stay.  It's the primary location that you inhabit.

Fact-If you make more money than the above listed figures...you may still be eligible for a reduced credit. 

Fact-You or your accountant needs to fill out Form 5405 which will help you determine your tax credit.  Then you will be able to claim that amount on line 69 of your 1040 tax return.  (Please consult your accountant)

Fiction-You can not borrow against the credit to help you with your down payment on your home.  That would be nice!  There are several different programs that will help you do that.  Please read some of my older blog posts.  I have written about quite a few of those programs.  If you have any questions...please email me at Tino.Muratore@gmail.com.

Thank you.