I have been asked by a number of clients about the new tax credit that was included in the recently passed economic stimulus bill. The following overview will help to explain what the new credit is all about:
Qualifying For The Credit
1. To qualify for the credit the home purchase must take place between 1/1/2009 through 12/31/2009.
2. The 2009 tax credit is an $8000 refundable tax credit or 10% of the purchase price. This means that if the purchase price of a home is $80,000, then you will hit the maximum of $8,000.
3. Refundable means that if you owe a tax liability of less then $8,000 the IRS will send you a refund of the difference. If you do not have a tax liability that is larger then $8,000, you will get a cash refund.
Exceptions to The Credit
1. There is a phase out range for this tax credit. For Joint tax filers it is $170,000 and single tax payers it is $95,000. If the home is purchased from a close relative such as spouse, parents, child, grandparents or grandchild, you are not entitled to the credit.
2. The home is not a primary residence. A primary residence is one where you spend the majority of you time (over 50%). Condos, single family and town houses are acceptable. No second or vacation homes. For new construction, the purchase date must be prior to 12/31/2009.
3. The recipient of the tax credit sells their home before the end of a full three years of ownership. If the home is sold prior to the three years of ownership the tax credit must be repaid.
4. The tax credit can be claimed on your 2008 or 2009 Tax Returns.
5. Nonresident alien's are not eligible.
6. A first time homeowner means that they did not own another primary residence at any time during the three years prior to the new purchase. If they are joint tax filers they both must meet the above criteria to qualify. This credit does not have to be repaid, which is different then the one passed last year.
Income Limits
1. Single filers $95,000
2. Married filers $170,000
3. The phase out for the income limit of $95,000 starts at $75,000 and for married at $150,000. A phase out means that the credit is proportionately reduced between the $75,000 and the $95,000, and the $150,000 and the $170,000.
I hope that this helps to explain about the new credit. For more information about the tax credit, first time home buyer programs or home loans please contact Wayne Katz, Senior Mortgage Advisor at Group One Mortgage, 561-791-0000 or contact me with any questions you may have about buying a home on the treasure Coast.
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