Hello All,
My name is Mark Clausen and I'm a realtor in Austin Tx. I have been in the real estate field in one aspect or another for about 20 years. I am an investor as well as a realtor and have owned my own development and construction companies. I consider myself a student of the industry and I am constantly trying to learn more. Over the past summer I have been doing a lot of open houses and speaking with perspective buyers I have discovered a common thread, most are under informed if not uninformed. My hope is to become a resource to help in curing this shortcoming. I plan to pick a topic each week and give you my input and answer any questions you may have. If I don't know the answer to your questions, I have the resources to get the answer. I hope you find this helpful.
This week I have picked the $8,000.00 tax credit due to its time sensitive aspect. To qualify you need to close on a primary residence between 01 Jan 09 and 30 Nov 09. The $8,000 tax credit is a bit of a misnomer. The tax credit is actually based on the purchase price of the home. The way it reads is 10% of the purchase price of the home up to $8,000.00. Granted there aren't a lot of homes under $80,000 but I want to be accurate. There are also income limitations that go along with this of $75,000.00 filing single and $150,000.00 for married couples filing jointly. The credit phases out incrementally until you reach income levels of $95,000 filing single and $170,000 married filing jointly. These numbers are based on modified gross income.
The first time homebuyer requirement is also misleading. This does not have to be your first home purchase. You are eligible as long as you have not owned a PRIMARY RESIDENCE in the past 3 years. I stress primary residence because the exclusion does not pertain to vacation homes or rental property.
This is a true credit and not a deduction. In the case of deduction you would subtract the $8,000 from your taxable income. With a tax credit you get a dollar for dollar reduction of your taxes owed. Even if you had a tax obligation of less than $8,000 you would receive a check for the difference. For example if you had a tax obligation of $3,000 you would receive a check for the difference or $5,000.
To claim this credit you can do a couple of things. If you close prior to Oct 15, 2009 you are allowed to amend your 2008 taxes and claim your credit. For a closing after Oct 15th but before Nov 30th you will have to claim your credit on your 2009 taxes. There is also a provision that will allow you to claim a home purchase in 2009 on your 2008 tax return if your income will no longer qualify in 2009. Check with you accountant for the specifics on all tax related questions.
Here in Texas we also have a program that allows you to get most of the credit money prior to purchasing your home. This is a state funded program that is designed to assist 1st time homebuyers with their down payment and closing cost. The program charges a $250.00 administrative fee and has a maximum up front pay out of $7,000. These funds are interest free for the initial 90 days. With proper planning this should be adequate time to file the appropriate tax forms and receive your credit funds. After 90 days the balance will carry a 10% interest rate for a 2 year term. This program is only available in conjunction with FHA programs.
I hope you have found this informative and I look forward to your questions. I would also appreciate any suggestions for future topics
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