First Time, New Home Buyer Tax Credit
Please note the new home buyer tax credit is a “Credit” and not a deduction. Deductions are often less valuable than a credit.
The actual credit is really also considered a “loan”. It is interest free, but is payable back over 15 year installments.
The maximum you can qualify for is the lesser of 10% of the purchase price of the home, or $7,500 ($3,750 for married couples filing separately).
The credit only pertains to First Time buyers, defined as an individual who has had no ownership interest in a principal residence for a three-year period ending on the date of the current home purchase.
Also, there’s a small window for this credit. It only applies only to homes purchased on or after April 9, 2008, and before July 1, 2009.
High-income homebuyers won’t benefit as much or at all. The phaseout starts for single filers with adjusted income of more than $75,000 and $150,000 for joint filers. It completely phases out at $95,000 for singles; $170,000 for married couples filing jointly.
Again, this is a CREDIT not a DEDUCTION. Heres an example of a tax deduction vs. a tax credit. This is where my accounting skills come into play.
Ex: of a Tax Deduction: If you & your spouse make a combined income of $80,000 and have a $7,500 tax deduction, instead of paying taxes on $80,000 you are paying taxes on $72,500, and are really not “getting” $7,500 back, you are getting taxed on less income.
Now, The same scenario with a Tax Credit: lets say the $80,000 income places you in X% tax bracket (theoretical of course) resulting in you having to pay say $9,000 of taxes on your income. The credit will take the $7,500 tax credit right off your actual tax owed, and you would then pay $1,500 in income taxes.)
Not everyone can qualify, For more information on the New Home Buyer Tax Credit Check out this straightforward chart issued by the National Association of Realtors.
Please consult with your CPA & Attorney regarding this tax credit. The information is provided as informative guide, but should never replace the advice of your CPA & Attorney.
Serving: Westchester County: Armonk, Bedford, Chappaqua, Mt. Kisco, Pound Ridge, South Salem, Katonah, and more.
Also serving Fairfield, CT County: Stamford, Danbury, Ridgefield, and more.
Check out our blog & listings: www.LiveArmonk.com & www.RichardsonRealtyTeam.com for more info!
Comments(1)