Homebuyer Tax Credit Overview.. .

The Homebuyer Tax Credit portion of the American Recovery and Reinvestment Act of 2009 provides an $8,000 tax credit to first-time home buyers (or buyers who have not owned a private residence in the past three years) who purchase a principal residence on or after January 1^st, 2009 and on or before November 30^th, 2009. The credit does not require repayment and will be claimed on a tax return to reduce the purchaser's income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.

What are the important points to know?

• The Tax credit has been raised from $7,500 to $8,000 or %10 of purchase price (whichever is less)
• The credit does not require repayment
• First time home buyers or buyers who have not owned a home in the last three (3) years
• To qualify, a single person must make less than $75,000 a year in income
• Joint ownership must make less than $150,000 a year in income to qualify
• Qualified buyers must purchase home on or after January 1^st, 2009 and no later than November 30^th, 2009
• The property must be the primary residence
• Purchaser(s) must remain in home for three (3) years or the credit will be recaptured at the sale of home

Are there restrictions for the home I want to purchase?

• The primary residence can be a condo, single family detached, co-op, townhouse or something similar
• The home must be located in the United States
• Vacation homes and rental properties are not eligible
• For new construction, the "purchase date" is the date you occupy the home. So the move-in date must be before December 1^st, 2009

Who is not eligible for the credit?

• If your income exceeds the phase-out range. This means joint filers with Modified Adjusted Gross Income (MAGI) of $170,000 and above and other taxpayers with MAGI of $95,000 and above
• You may not buy your home from a close relative. This includes your spouse, parent, grandparent, child, or grandchild
• Vacation homes and rental properties are not eligible
• If you stop using your home as your main home
• If you sell your home before the end of three years
• If you are a nonresident alien you are not eligible

Recapture-3 Year Residency

• If the home is sold prior to three years of ownership, the tax credit must be repaid at closing

*This provision is designed to prevent flipping homes in order to get the credit.

Other Provisions

• Purchaser(s) who utilize state/local revenue bond financing can now use the credit
• Purchaser(s) who bought before January 1^st, 2009 and received the previous $7,500 tax credit are still subject to the terms of that repayable credit

When can I claim the Credit?

• It can be claimed on your 2008 Tax Return (to be filed by April 15^th, 2009), an amended 2008 Tax Return, or your 2009 Tax Return 

Source: National Association of REALTORS®