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First Time Buyer Tax Credit Simplified

LOOKING FOR INFO ON THE 1st TIME BUYER $8,000.00 TAX CREDIT? LOOK HERE!

First Time Buyer Tax Credit A lot of people are asking me about the specifics of the $8,000.00 tax credit these past few weeks, and for a good reason. The market is heating up and this is money in pocket for approved first time buyers this year. So I posed this entry in a Q&A format to best represent the most commonly asked questions and their answers, so read on...

Q. What specifically is the tax credit?

A. The first-time credit is a new credit included in the recently enacted Housing and Economic Recovery Act of 2008. The credit was expanded in 2009 for homes purchased in 2009, increasing the amount from a previous $7500.00 in 2008 to $8,000.00 this year. Additionally, the program eliminated the requirement to repay the credit unless the home ceases to be the principal residence within 36 months of initiation.

Q. How much is the credit?

A. The credit covers 10% of the purchase price of a home with a maximum of $8,000.00 for either a single tax payer or a married couple filing a joint return, but only half the amount for married persons filing joint returns (married couples won't get a $16,000 credit!). The full credit is available for homes costing $80,000.00 or more.

Q. Which home purchases qualify for the first time home buyer credit?

A. Any home bought by a first time buyer before Dec 1, 2009 that is owner-occupied. For new construction the purchase date will be the date of occupancy. A first time buyer is defined as anyone who has not owned a home in the last three years.

Summer Cottage VACATION HOMES DON'T COUNT!

Q. How do I apply for the credit?

A. The credit is claimed on the new IRS form 5405, "First Time Buyer Tax Credit" and filed with your 2009 federal income tax return.

Q. Are there income limits?

A. Yes. Higher income tax payers will have the credit reduced or eliminated. The credit is phased out based on the 1st time buyer's modified adjusted gross income. For a married couple filing jointly the phase out range is $150,000.00 to $170,000.00. For other tax payers the phase out period is $75,000 to $95,000.00. This means that the full credit is available to those that are under these thresholds.

Q. Does the credit apply for "contracts for deed"?

Generally, no. State laws may pre-empt this so check with your state. New Hampshire disallows this practice.

Q. What about non-married co-buyers?

A. IRS notice 2009-12 provides guidance for allocating the first time buyer credit between tax payers who are not married.

Q. What if my taxes and/or my income is exempt from tax and I have no filing requirement?

A. The 1st time buyer tax credit is fully refundable and having tax-exempt income does not eliminate eligibility. Although there are maximum income limits for qualifying, there are no minimum income criteria. Therefore, someone with no taxable income who qualifies as a 1st time buyer may file for the sole purpose of claiming the credit for a refund!

$8,000 tax credit To take this credit you must close prior to Dec 1st, NOT Dec 31st! If you are still in your research and browsing stage remember this! My team and I can direct you to New Hampshire's finest, most experienced Realtors with tons of listings including bank owned homes and other motivated sales!

Q. Who cannot take the credit?

A. If any one of the following describe you, you're excluded from eligibility:

- Your income exceeds the phase-out range.

- You buy a home from a close relative. This includes spouse, parent, grandparent, child or grandchild.

- You do not intend to occupy the home for three years after purchase.

- You sell your home before the end of the year

- You are a non-resident alien

- You have owned a home in the last 3 years

These are the major points and guidelines of the $8,000.00 1st time buyer tax credit. For more please contact your tax accountant or my team and I. We will gladly answer any additional questions you may have! And remember; no money down, no buyer closing cost, 1st time buyer mortgages with no monthly PMI are available to qualified NH applicants and qualifying is truly easy as pie! For more on the no down payment, no PMI mortgage for first time buyers (and others) in New Hampshire please visit:

http://activerain.com/blogsview/801081/100-financing-very-much-alive

As always, I'm here to help!

To fill out a secure online mortgage application please visit:

http://www.saramortgage.com/apply.asp/Hollis/New%20Hampshire

Or if you wish, simply call me to do the application by phone or make an appointment to visit me!

Jamie Woods ~ Senior Loan Officer ~ FHA/VA/USDA Specialist ~ SARA Mortgage & Financial, LLC ~