Reminder: First Time Home Buyers Tax Credit Available Through 7/1/2009

 As we enter ino a new tax year and you are considering buying a home, I wanted to take a moment to remind 'First Time Buyers' that you may qualify for a tax credit up to $7500 for the 2009 tax year.  This a program which was set in place last year and below are some highlights on the program from the website www.fedralhousingtaxcredit.com :

• The tax credit is available for first-time home buyers only.
• The maximum credit amount is $7,500.
• The credit is available for homes purchased on or after April 9, 2008 and before
  July 1, 2009.
• Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.
• The tax credit works like an interest-free loan and must be repaid over a 15-year period. \

Some questions from this program are:

1. What is the definition of a 'First Time Home Buyer'?
   1. The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer. (from the Federal Housing Tax Credit wesbite)
2. How is the tax credit determined?
   1. Just as an example, assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $7,500 by 0.5. The result is $3,750.
      
      Here's another example: assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer's income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $7,500 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,625.
      
      Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances. (from the Federal Housing Tax Credit wesbite)
3. Click here for more FAQ's regarding this program

So, if you qualify under this program as a 'First Time Home Buyer', you can take advantage of some great components that truly make this great time to buy:

1. Great selection with many homes on the market that are less than 5 years old
2. Great prices.  See my last article showing the average selling price trends for 2006 through 2008 in Palm Coast.
3. Historically low interest rates.

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