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FIRST-TIME HOMEBUYER TAX CREDIT EXPLAINED

By
Real Estate Agent with Gibson Sotheby's International MA # 9515712

If you're a visual person, as I am, you can understand the first-time home buyer credit as modified in the new American Recovery and Reinvestment Act better by looking at the chart below.

Note: the Major Modifications are Italicized

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

At today's interest rates, a single person can afford a home in the 300's and a couple can afford a home in the 500's to get the maximum benefit from this program.

By the way, if you're a first time home buyer and are looing for a great buyer's agent, give me a call at 978-580-1069.

brgds,
mike

Posted by


Mike Hunter, the House Hunter
Your Neighborhood Realtor for Sudbury & Metrowest Boston.

William Raveis Real Estate
361 Boston Post Rd, Sudbury, MA 01776
Tel: 978-580-1069
Blog: http://www.hunterthehousehunter/blog
Email: Mike.Hunter@Raveis.com
Web: www.HunterTheHouseHunter.com
Information deemed Reliable but not Guaranteed.

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