I dove into the Stimulus Plan on the House Appropriations website to try and find out what kind of agreement the Senate and House of Representatives came to regarding the First Time Home Buyers Tax Credit. Not the most fun reading, but extremely important to know about for any serious real estate professional.
Currently, a taxpayer who is a first time home buyer (someone who has not owned a home within the previous three years) was allowed a refundable tax credit of the lessor values of $7500 or 10% of the purchase price of the home. The credit was allowed for homes purchased between April 9, 2008 to July 1, 2009. However it would have to be repaid, interest free, over a period of 15 years, or recaptured at the time of sale.
The stimulus package modifies the current rules, but also keeps the following in place:
- the tax credit phases out for individual tax payers you have a modified gross income of $75,000 to $95,000 ($150,000-$170,000 for joint filers)
- tax payers can claim the purchase of a home on their 2008 tax return (thus the reason for the credit beginning on December 31, 2008), even if they buy their home, for example in January of 2009
The new agreed to provisions that go into effect December 31, 2008 and are:
- extends the current home buyer tax credit for qualifying home purchases to December 1, 2009
- increases the maximum credit to $8000 ($4000 for a married person, filing separately)
- waives the recapture of this tax credit for homes bought between December 31, 2008 to December 1, 2009
- if the home is sold, or ceases to be the primary residence, within 36 months of the closed date, then the rules of recapturing the tax credit apply (currently over a time period of 15 years)
The part that really stinks about the revisions is for the first time home buyers who closed on their home between April 9, 2008 -December 30, 2008. It appears they will still need to repay the tax credit of $7500 over a period of 15 years, just as originally written, and none of the new revisions will apply to them.
Don't worry though, at least you get a tax credit. We closed on your new home in March 2008, and even though we are only 30 days out for qualifying, no soup for us!
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There are a lot of blogs out there on Active Rain that do not have correct information about the revised bill. Many are quoting either provisions in the House version of the bill, or the Senate version, NOT the compromised bill that is being sent to the President on Monday. The information above is directly from the House Appropriations website which shows each plan proposed by the Senate and House, and is then followed by the compromise reached between the two and what will be sent to the White House to be signed into law.