I imagine that the new $8000 tax credit is on the tip of most people's tongues these days...at least I know it is in my corner of the world. Whether you agree with the basis of the $8000 tax credit or not, there's no denying that millions Americans are looking for a reprieve or any sign of "light at the end of the tunnel."
Below is a collection of a 5 different questions I've received over the past couple of weeks from buyers, sellers, family members and former colleagues who are considering home ownership. The people asking the questions might be different, but it seems like everyone is curious about the same thing. Questions #1, #4 and #5 seem to be the ones I keep getting the most.
I've too have asked a bunch of questions and enslisted assistance from two reliable CPAs (certified public accountants) I've known for years. See the Q&A below.
1. Q: I'm hearing conflicting information about this tax credit bill President Obama signed. Is the $8000 tax credit for "first-time home buyers only" or all buyers? I am so confused about how this thing works!
AMBER: The $8000 credit included in the final version of the economic recovery/stimulus plan is for first-time home buyers. By definition (for the purpose of this government plan) a "first-time home buyer" is someone who has not owned a principal residence for 3 years before prior to buying a different house.
2. Q: We are thinking about continuing to live with our in-laws in Marlboro until the baby arrives. We bought a modest vacation condo down the shore last year in the Spring before we met you. Will that count as our $8000 tax credit? What if we decide to still purchase a primary residence before the end of 2009, can we still be eligible for the $8000 credit?
AMBER: No, if you've owned a "vacation home" but not a principal residence within the past 3 years, you would still qualify for the $8000 tax credit, and would be eligible to receive it as long as you purchase a "primary residence" within that 2009 timeframe. To be sure, double check with your accountant.
3. Q: We have friends in Freehold who bought their first home in July of 2008. They said if we buy in 2009 we'll have to pay back the tax credit just like they will. Is that true?
AMBER: If your friends are entitled to a $7500 tax credit and they purchased in 2008, the money they will receive will likely have to be repaid over time. However, if you buy a home between January 1, 2009 through December 1, 2009, you shouldn't have repay the $8000 credit.
4. Q: We heard the $8000 tax credit is for low income families only. We make a little over $100,000 in combined income. Does that fall within the financial requirements?
AMBER: The $8000 tax credit comes with income limitations, but it's not for low-income families only. Married couples must have a modified adjusted gross income (better know as AGI) of no more than $150,000 and $75,000 per year is the cap for single people in order to qualify for the full credit. There is a possibility that any first-home buyers earning more than $150,000 may qualify for a reduced tax credit, but this hasn't be fully determined or approved yet.
5. Q: What happens if we buy a home in 2009, but for some reason we have to sell it within the next 2 years?
AMBER: In order to receive the $8000 tax credit and not have to pay it back to the government, you cannot sell the home in a time period any less than 3 full years from the date that title/deed was actually transferred into your name. If you do sell in less than 3 years you will very likely have to pay the $8000 back to the US government. They might make an exception for justifiable and unforeseen circumstances such as death, armed forces deployment or death, but that is not a guarantee.
NOTE**I encourage anyone who has additional questions about tax credits or anything related to the IRS, to check with their own licensed CPA and go to www.IRS.gov for the most comprehensive and up-to-date professional advice.**
Information courtesy of:
AMBER NOBLE-GARLAND
Weichert, Realtors (Marlboro ~ Manalapan office)
455 Route 9 South
Manalapan, NJ 07726
917-723-5645 - cell
732-536-4400, ext 199 - office
www.AmberLovesRealEstate.com
"Your Reliable Resource For Monmouth & Middlesex County Real Estate, Local Info & More"
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