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$7,500 Tax Credit for First Time Home Buyers

By
Real Estate Agent

The Housing and Economic Recovery Act of 2008 authorizes a $7,500 tax credit for qualified first-time home buyers purchasing homes on or after April 9, 2008 and before July 1, 2009.

Late yesterday - the House passed the $819 billion stimulus plan, which included a modified first time homebuyer tax credit. The Senate may vote on its version of the bill sometime next week.

The bill is changing the terms of the $7,500 tax credit that was issued as a part of the Housing Recovery Act, which Congress passed last summer.

Previous legislation required that the tax credit be repaid over 15 years, making it more of a no-interest loan. Not surprisingly, the measure had little impact on the market. The stimulus bill now under consideration would make that tax credit a true credit that doesn't need to be repaid. We'll see.

In the meatime this is how it stands now. This FAQ is from the Federal Housing Tax Credit site. I've picked out a few of the key questions.

Frequently Asked Questions
About the First-Time Home Buyer Tax Credit

The following questions and answers provide basic information about the tax credit. If you have more specific questions, we strongly encourage you to consult a qualified tax advisor or legal professional about your unique situation.

Who is eligible to claim the $7,500 tax credit?
First time home buyers purchasing any kind of home-new or resale-are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after April 9, 2008 and before July 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs.

How do I claim the tax credit? Do I need to complete a form or application?
Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. No other applications or forms are required. No pre-approval is necessary; however, prospective home buyers will want to be sure they qualify for the credit under the income limits and first-time home buyer tests.

If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
Possibly. It depends on your income. Partial credits of less than $7,500 are available for some taxpayers whose MAGI exceeds the phaseout limits. The credit becomes totally unavailable for individual taxpayers with a modified adjusted gross income of more than $95,000 and for married taxpayers filing joint returns with an AGI of more than $170,000.

What is the difference between a tax credit and a tax deduction?
A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $7,500 in income taxes and who receives a $7,500 tax credit would owe nothing to the IRS.

Provided by:
Debra Gravelle
Moses Lake Realty Group
537 W. Broadway
Moses Lake, WA 98837
509-771-9099

Debra@DialDebra.com                                                                            

http://www.grantcountyproperties.com

 

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