As part of the American Recovery and Reinvestment Act of 2009, Congress authorized a first-time homebuyer tax credit of up to $8,000. The $8,000 credit replaced the $7,500 tax rebate program that was included in 2008's stimulus program.
According to the IRS, a first-time homebuyer is anyone who has not owned a "home" in the last 3 years where "home" is defined as a home in which a person has lived in and occupied. It can include traditional homes, houseboats, trailers and other residence types. The IRS was smart because they also defines what it means to be a first-time homebuyer with respect to couples. According to the IRS definition, there's no clean way for spouses or soon-to-be-married types to "cheat the system" and take an undue $8,000 in tax credit. The $8,000 First-Time Homebuyer The tax Credit requires both homeowners to be first-time homebuyers in order to claim the credit.
One of the biggest reasons why the $8,000 tax credit is working is because, unlike its 2008 counterpart, the government doesn't require the 2009 version of its tax relief plan to be paid back over time. First-time home buyers in 2009 can claim their credit and never have to repay it - best of all, the credit is automatic -there's no extra paperwork to sign with your real estate agent and no additional disclosures between the buyer and the seller.
The IRS instructions show that not every first-time homebuyer will be eligible to claim an $8,000 tax credit. Some notable, exclusionary cases include first-time homebuyers who:
- Separately filed taxes and adjusted gross income exceeds $95,000
- Jointly filed taxes and whose adjusted gross income exeeeds $170,000
- Acquire property from a mother, father, sibling or child
- Acquire property from a corporation/partnership in which you are a majority owner
- Acquire the home as a gift or inheritance
BEWARE: If you do qualify for the credit, beware of the program's guidelines. For example, If you sell your home, or cease to use it as your owner occupied home within 3 years, the IRS will require a full payback with only a few allowable exceptions. If you plan to keep your home more than 3 years then you will be ok.
Gerard Ladalardo, CMPS
www.caloanpros.com
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