As promised, here's an update on the economic stimulus plan as it relates to home purchases.
This package includes a tax credit of the lesser of $8,000 or 10% of the purchase price of a home for first-time homebuyers (first purchase ever or have not owned a primary residence in the three years prior). First of all, the credit has been raised to $8,000 and doesn't require a payback-classifying it as a true credit (requires pay back only if you sell the home within three years of purchase). This means it will be easier to sell your home with more buyers in the market and, if you're buying a home, you may be eligible for the tax credit too.
This tax credit is also refundable, which means if you subtract your tax liability from $8,000, you receive a credit. However this is assuming you purchase a home that's at least $80,000 (since $8,000 is 10% of the purchase price). For example: If you have a tax liability of $3,000, you will receive a $5,000 credit. If you have no tax liability, you receive an $8,000 credit. If you are due a tax refund of $1,000, you'll receive a $9,000 credit.
See the chart below for more details, including income limitations and a comparison with the 2008 package. Call me today to take advantage of this great offer.
Kimberly Daeger, Realtor Service Excellence for Buyers and Sellers Real Living Realty Services, Inc. Cell: 937.545.6294 kimberly.daeger@realliving.com www.realliving.com/kimberly.daeger
FIRST-TIME HOMEBUYER TAX CREDIT
As Modified in the American Recovery and Reinvestment Act
Major Modifications Bolded
February 2009
|
Feature |
CREDIT AS CREATED JULY 2008 APPLIES TO ALL QUALIFIED PURCHASES ON OR AFTER APRIL 9, 2008 |
REVISED CREDIT - EFFECTIVE FOR PURCHASES ON OR AFTER JANUARY 1, 2009 AND BEFORE DECEMBER 1, 2009 |
|
Amount of Credit |
Lesser of 10 percent of cost of home or $7500 |
Maximum credit amount increased to $8000 |
|
Eligible Property |
Any single family residence (including condos, co-ops, townhouses) that will be used as a principal residence. |
No change All principal residences eligible. |
|
Refundable |
Yes. Reduces (or can eliminate) income tax liability for the year of purchase. Any unused amount of tax credit refunded to purchaser. |
No change Purchasers will continue to receive refund for unused amount when tax return is filed. |
|
Income Limit |
Yes. Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000). |
No change
Same income limits continue to apply.
|
|
First-time Homebuyer Only |
Yes. Purchaser (and purchaser's spouse) may not have owned a principal residence in 3 years previous to purchase. |
No change Still available for first-time purchasers only. Three-year rule continues to apply. |
|
Revenue Bond Financing |
No credit allowed if home financed with state/local bond funding. |
Purchasers who utilize revenue bond financing can use credit. |
|
Repayment |
Yes. Portion (6.67% of credit or $500) to be repaid each year for 15 years, starting with 2010 tax filing. |
No repayment for purchases on or after January 1, 2009 and before December 1, 2009 |
|
Recapture |
If home sold before 15-year repayment period ends, then outstanding balance of repayment amount recaptured on sale. |
If home is sold within three years of purchase, entire amount of credit is recaptured on sale. Applies only to homes purchased in 2009. |
|
Termination |
July 1, 2009 (But note program changes for 2009) |
December 1, 2009
|
|
Effective Date |
Purchases on or after April 9, 2008 and before January 1, 2009. Repayment to begin for 2010 tax year. |
All revisions are effective as of January 1, 2009 |
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