ERA Landmark notes beneficial changes
in the American Recovery and Reinvestment Act
Individuals and couples contemplating the purchase of their first home have an opportunity to take advantage of a federal income tax credit that can help put them in the home of their dreams - and the incentive is even more attractive than before.
"The American Recovery and Reinvestment Act of 2009 modified the existing, temporary federal income tax credit for qualified first-time homebuyers," said Robyn Erlenbush, Broker/Owner of ERA Landmark Real Estate. "For those who qualify, the changes to this incentive make it even more valuable. The incentive has been extended, but it won't last forever; for those considering home ownership, 2009 is proving to be a unique and compelling opportunity."
In this version of the tax credit, qualified "first-time" buyer - defined as an individual who has not owned a home during the past three years - can receive a federal tax credit of 10 percent of the cost of their principal residence, up to a maximum credit of $8,000. Buyers receive a tax credit on their personal income tax return in the calendar year following the year of closing on their home.
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A CONSUMER GUIDE TO THE FIRST-TIME HOMEBUYER FEDERAL INCOME TAX CREDIT
As Modified in the American Recovery and Reinvestment Act
February 2009
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FEATURE |
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FIRST-TIME HOMEBUYER FEDERAL INCOME TAX CREDIT: EFFECTIVE FOR PURCHASES ON OR AFTER JANUARY 1, 2009 AND BEFORE DECEMBER 1, 2009 |
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Amount of Credit |
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The amount of the homebuyer federal income tax credit is the lesser of 10% of the cost of the home bought or $8,000. This homebuyer income tax credit reduces income tax liability and requires no repayment. |
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Eligible Property |
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Any single-family residence (including a condo, co-op, or townhouse) may be an eligible property under the homebuyer income tax credit, provided it will be used as the homebuyer's principal residence. |
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Income Limit |
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In order to be eligible for the homebuyer income tax credit in full, the homebuyer can have an annual adjusted gross income of no more than $75,000 ($150,000 on a joint return). A homebuyer with an annual adjusted gross income above that level and up to $95,000 ($170,000 on a joint return) is eligible for a reduced tax credit. |
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First-time Homebuyer Only |
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The homebuyer income tax credit is designed for first-time homebuyers, which means the homebuyer (and/or the homebuyer's spouse) can not have owned a principal residence in the 3 years prior to purchase of the eligible property. |
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Repayment |
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There is no repayment of the homebuyer income tax credit by the homebuyer. |
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Recapture |
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However, if the eligible property is resold within three years of purchase, the entire amount of homebuyer income tax credit is recaptured on the sale. |
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Effective Date |
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The First-Time Homebuyer Federal Income Tax Credit is effective for purchases on or after January 1, 2009 and before December 1, 2009. This guide reflects a modification from the First-Time Homebuyer Federal Income Tax Credit, which remains in effect for homes purchased by eligible homebuyers between April 9, 2008 and Dec. 31, 2008. |
* Seek advice from a professional tax advisor for specific tax calculations and timing for claiming the tax credit.
SOURCE: Based on information provided by the National Association of Realtors. For modifications from prior tax credit announced in April 2008, click here.
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