First time home buyer - Federal Tax Credit -- $7500 vs $8000
For many potential first time home buyers, the 2008 and 2009 "First-time Homebuyer Tax Credit" has been a bit of a mystery.
I've had many questions such as -- When do you get your tax credit? Do you have to pay it back? What if you sell your house within 2 or 3 years? What if I'm a first time home buyer but my husband isn't?
REALTOR.org created a "Cheat Sheet" that covers EVERYTHING and should answer 99% of your questions about the 2008 and 2009 First time home buyer tax credit.
FREQUENTLY ASKED QUESTIONS:
What is the difference between the 2008 tax credit and the 2009 tax credit (other than the amount)?
The primary difference is that the $7500 tax credit of 2008 needs to be paid back over the next 15 years (at $500 per year). The new 2009 tax credit does not need to be paid back, as long as you stay in your home for at least three years.
When would I receive the $8,000?
There are several variables. Assuming that you qualify for the full $8000 tax credit, you will need to file your 2009 income taxes in early 2010 and if you don't owe any additional income tax, you should receive your check for $8,000 from the federal government within 1 to 6 weeks (it just depends on when you file and how your tax preparer submits your information.
A few other possible scenarios:
- If you owe $2,000 on your tax return, you will receive a refund of $6,000 ($8000 - $2000 = $6000)
- If you are entitled to a refund on your income taxes (let's say $1,500), then you would receive an refund of $9,500 ($1500 + $8000 = $9500)
When is the last day I can buy a home and still get the $8,000 Tax Credit?
You must purchase BEFORE December 1, 2009. That means that you should make an offer on a home in mid-October, as it usually takes 30 to 45 days to close on a home or condo.
I owned a home a few years ago -- can I still qualify for the First-time Homebuyer Tax Credit?
Yes, if you have NOT owned a principal residence in the three (3) years prior to purchasing your new home.
My husband is not a first-time home buyer, but I am -- can we still qualify for the tax credit?
You would only qualify if your husband (or spouse) has NOT owned a principal residence in the three (3) years prior to purchasing the new home.
Are there any income limitations?
Yes. The full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). If you are an individual who makes $85,000 (for example), you will still qualify, just not for the full amount. The tax credit phases out to those who make more than $95,000 (individuals) and $170,000 (on a joint return).
How long do I have to live in my home or condo?
If you sell your home before the 3-year limit, you will be required to pay back the $8000.
What if I want to buy a $30,000 foreclosure home?
The amount of the tax credit is the lesser of 10 percent of cost of home or $8,000. So if you purchased a $30,000 home, you would get a $3,000 tax credit. In order to get the full $8,000 you would need to purchase a home that is at least $80,000.
I hope this information was helpful to you! If you have any questions about the tax credit or need assistance with the purchase of your first home, please call anytime at (404) 432.1844. I truly enjoy working with first-time home buyers and would be honored to help.
KERRY LUCASSE :: ATLANTA & DECATUR REAL ESTATE CONSULTANT :: KELLER WILLIAMS REALTY