Blogging From The Desk of Alicia Lagarde-Craig
The recently passed American Recovery and Reinvestment Act, including the $8,000 tax credit for first-time buyers, presents an excellent opportunity for buyers ready to take advantage of today’s affordable market. Nonetheless, many first-time buyers might be unsure just exactly how the tax credit works or how it improves upon a similar credit offered last year.
I hope this blog will help you to understand the advantages of the $8,000 tax credit and capitalize on this financial incentive before it is no longer available. If you have any questions, please call Alicia at (504) 382-3724.
The American Recovery and Reinvestment Act of 2009 offers an $8,000 tax credit for first-time buyers who purchase a home on or after January 1, 2009 and before December 1, 2009.
Here are the specifics of the $8000 tax credit:
*The temporary credit is only available for home purchases made from January 1, 2009, but before December 1, 2009 and is equal to 10 percent of the cost of the home, up to a maximum credit of $8,000. (For example, a home purchased for $80,000 or more would qualify for the full $8,000 credit, while a $50,000 home would only qualify for 10 percent, or $5,000).
*Only first-time homebuyers can take advantage of the tax credit. A first-time buyer is defined under the tax credit as an individual who has not owned a home in the last three years. For married joint filers, both must meet the first-time homebuyer guidelines in order receive the tax credit when filing a joint return.
*There are income guidelines on the tax credit. Individuals with an adjusted gross income up to $75,000 (or $150,000 if filing jointly) are eligible for the full tax credit. The credit is phased down for those earning more and is not available for those with an income above $95,000 (or $170,000 if filing jointly).
*Buyers claim the credit on their federal income tax return to reduce their tax liability. If the credit is more than their total tax liability for that year, the buyer will get a refund check for the balance.
*Eligible properties include anything that will be used as a principal single-family residence. Single-family residences also including condos and townhouses.
*The new tax credit does not have to be repaid if the buyer stays in the home at least three years. But if the home is sold before that, the entire amount of the tax credit is recovered from the sale. People who purchased homes under the 2008 $7,500 tax credit program will still be required to repay that credit to the government over a 15-year period.
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