Do you feel confused about tax credits? Did it seem to you that every day of the week last week produced a different description of the facts? It's time to clear up the confusion!
From careful examination of the facts, I believe I can truthfully explain to you what the tax credits for homebuyers in the new stimulus plan really means to you.
The Stimulus Plan contains a new tax credit for first-time homebuyers. Essentially, first-time homebuyers within certain income limits who purchase a home in 2009 before December 1, 2009 will receive a tax credit of up to $8,000.
The program is similar to the $7,500 tax credit which applied to home purchases made in 2008 after April 9.
While the Senate version originally included a $15,000 tax credit for all homebuyers, to lower the cost of the Stimulus Plan the final version of the Plan contained this smaller tax credit. This tax credit is applicable only to first-time homebuyers.
To qualify as a first-time home buyer as defined in the programs, the purchaser (and the purchaser's spouse) may not have owned a home in the three years prior to the purchase date of the home. Single family homes qualify for the program. The home must be the primary residence.
Both tax credits are subject to the same adjusted gross income (AGI) limitations (full credit for AGI less than $75,000 single/$150,000 joint, phased out for AGI up to $95,000 single/ $170,000 joint).
The amount for either credit is the lesser of 10% of the home purchase price or $7,500 or $8,000, as applicable.
While a purchaser still owns the home, the $7,500 credit must be repaid in equal payments over a period of 15 years, starting with the 2010 tax filing. The new $8,000 credit will not need to be repaid. Again, the $7,500 credit needs to be repaid, while the $8,000 credit does not!
Upon sale of the home, any portion of the $7,500 credit not yet repaid is due in full. No portion of the $8,000 credit is due upon sale of the home, if the home is owned for more than three years. If the home is sold within the first three years, the full amount of the credit is due upon sale.
The $7,500 credit was not available to any purchaser utilizing state/local revenue bond money to help finance the home purchase. There is no such restriction on the $8,000 credit.
Under both the $7,500 and the $8,000 programs, the credit will be claimed on the purchaser's income taxes. Any amount in excess of taxes owed will be refunded to the purchaser.
The bottom line:
If you were a first time home buyer and purchased a home between April 9, 2008 and December 31, 2008 you will receive the $7,500 tax credit that must be repaid. (providing all other conditions were met)
If you are a first time homebuyer who purchases a home between Jan 1, 2009 and Dec 1, 2009 you will receive an $8,000 tax credit that does not have to be repaid. (providing all other conditions were met)
It's easy to be confused with all of the information. The easiest way to find out exactly what you qualify for is to contact a professional!
Call Kimberly Wilson, Your Dawsonville Real Estate Specialist today!
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