First Time Homebuyer's Tax Credit ----- What is it?? What Does It Mean?? Who Can Get IT??
There has been lots and lots of talk (and confusion) about the economic stimulus bill and what it means to home buyers. Who qualifies? What year can I claim the credit? How much of a refund would I get back? What are the criteria to receive the credit?
The bill states that first time home buyers can claim a tax credit worth $8,000 OR 10% of the home's value, whichever amount is less. So, if you are a first time home buyer - and if you bought a condominium for $65,000, your tax credit under the bill would be $6,500, not $8,000. Likewise - if you bought a home for $150,000, your tax credit under the bill would be $8,000, not $15,000.
Qualifying ---- In order to qualify for the credit, the home purchase must be made between January 1st and November 30th of 2009 (so if you buy a home on December 1, 2009 you are not eligible). In addition, there are income restrictions as well. To qualify, a single person must make less than $75,000 a year. Married couples must make under $150,000 a year. However, higher income buyers may receive a partial credit. (Talk with your accountant or the IRS for details.)
You must also live in the house purchased for at least three years or you will be required to pay back the credit. The definition in the bill for a first time home buyer is anyone that has not owned a home in the last three years. Furthermore, if you don't live in the house purchased this year for the three years following the purchase, you will have to pay the credit back to the government. This credit is designed to benefit people who live in their own houses, not house flippers or speculators.
What is a refundable tax credit? When tax professionals and the IRS talk about "refundable tax credits," they do not mean that you have to pay the credit back to the government. A refundable tax credit means that if you owe less tax than the amount of the tax credit, you will receive a refund - even if you have no other tax liability for 2008. That's not a bad deal. Check with your accountant or the IRS for details.
Tax Filing ---- To claim the credit on your taxes is just a matter of filling out the form, without any additional paperwork involved (I question that but that's what we hear).
Q. If I am building a new home in 2009 on my own land, will I still qualify for the $8,000 first time home buyer's tax credit?
A. You will need to check with your Tax Accountant or with the IRS via phone or website - but it sounds like building a home, that will be completed and you will occupy before December 1, 2009, could provide you with the opportunity to claim this $8,000 tax credit.
Check It Out! Maybe You Will Fit the Criteria!
Alice and Jim Hayes are Licensed Realtors with Loveless Realty in Libby, MT. Please call us at 406/293-8364 or 293-1926 or visit our 24-hour open house at www.alicehayes.com
Comments (2)Subscribe to CommentsComment