The Federal Government just approved a First Time Home Buyer Tax Credit. This tax credit is available for homes purchased on or after January 1, 2009 through December 1, 2009. The tax credit is 10% of the home’s purchase price, up to a maximum of $8,000. You must be a first time home buyer, and your income must be below $75,000 for a single taxpayer, up to $150,000 for married couples. If the yearly income is higher, taxpayers still may be eligible for some assistance. This tax credit does not need to be repaid, (unlike the 2008 tax credit, that needed to be repaid). The $8,000 tax credit is refundable. The homebuyer credit can be claimed even if the taxpayer has little or no federal income tax liability. The tax credit is dollar for dollar reduction in what the taxpayer owes. As an example, if the taxpayer owed $3000 in federal taxes before the tax credit, the taxpayer would get a check back for $5000 from the federal government. If you are eligible for this tax credit, you do not have to wait until the end of the year to benefit from this program. Prospective home buyers can adjust their withholding up the amount of the credit. Increasing his/her take home pay. California State Tax Credit for purchase of New Homes. This allows for a state tax credit up to $10,000. This credit applies to new California houses and condos bought as primary residences between March 1, 2009 and March 1, 2010. The credit is based on 5% of the purchase price or $10,000, whichever is lower. The owner must live in the home for a minimum of 2 years. The credit is taken in the year of the purchase, and the two following years (for max credit, it would be $3,333 off buyer’s state taxes each year). The state tax break is limited to $100 million, about $10,000 dwellings. If you are a first time homebuyer, and purchasing a new home, these 2 credits can be combined for a total credit of $18,000. With interest rates down around 5%, purchase prices low, and great tax benefits, how can you afford not to make that home purchase?
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