The home buyer tax credit is only available to purchasers at certain income levels: yearly incomes of $125,000 for single taxpayers or $225,000 for married couples filing jointly. The tax credit starts to phase out above those levels, with partial tax credits available for taxpayers whose income is within $20,000 of the limits. The income level limits are the same for both the first-time home buyer tax credit and the longtime homeowner tax credit, so if your income is above those levels, you will not be eligible for either credit.
The partial tax credit is computed based on the amount of income you earn within the $20,000 phase-out range. For example, if your income is $135,000 for a single taxpayer, you would have $5,000 of income in that phase-out range (i.e., $5,000 above the $125,000 limit). That would "use up" 25% of the $20,000 phase-out range, so your partial tax credit would be the remaining 75%. So if you were otherwise eligible for the first-time home buyer tax credit of $8,000, your tax credit would be $6,000 (75% of $8,000).
The qualifying income levels are based on your "modified adjusted gross income" ("MAGI"), which includes your wages, salary, interest income, dividends, capital gains, and certain foreign investment income. Your MAGI is determined after making certain "above the line" deductions such as health savings account deductions, alimony, and others, but before the "itemized deductions" such as charitable contributions, state and local taxes, and home interest. Determining your qualifying income can be a complicated issue, so you should consult with your accountant before making any decisions.
Contact Anthony Stokes Pereira, Better Homes and Gardens Rand Realty
I can help you with every aspect of buying or selling your home because I'm experienced, because I am a Better Homes and Gardens Rand Realty Real Estate Professional . . .and because I care.
As your Better Homes and Gardens Rand Realty Sales Professional, I will provide you with the information you need to make an educated decision.
The relationship between a home buyer or seller and their agent is based on trust, shared goals and understanding. I strive to continually improve and to do this I listen and take the needs and wants into consideration.
For assistance with any of your real estate needs, please contact me, whether it's to get started on helping you realize your goals and dreams, or just to ask a question - no pressure, no hassle, no obligation - just a friendly conversation. I would welcome the opportunity to make a difference for you.