5 Important Questions Answered RE: The First Time Homeowner Tax Credit

By
Real Estate Agent with Tierra Antigua Realty

5 Important Questions Answered About The First Time Homebuyers Tax Credit

 

In my opinion, not enough people out there know about this great benefit that is being offered right now for first time homebuyers. If you buy a home between now and Nov. 30th of this year you are eligible for a tax credit of $8,000! That's a HUGE benefit!

But there are a lot of questions out there about the details. I wanted to answer the top five questions I've been hearing about the credit.

  

#1 Does the credit need to be re-paid?

No. There is no re-payment required. Repayment would only be required if you sell the property within 3 years of purchase.

 

 

 

 

#2 Is the amount 10% of the purchase price, $7500 or $8000?

In 2008 the limit was $7500 but it has been raised to $8000. More specifically, the credit amount is 10% of the purchase price OR $8000, whichever is less. So unless you are buying a home under $80,000, your credit will be $8000.

 

 

#3 What defines a First Time Homebuyer?

For the purpose of this credit, a first time home buyer is someone who has never owned a home or has not owned a home for 3 years prior to this purchase. Also, the home purchased must be used as the primary residence.

 

 

#4 Are there income restrictions?

Yes. An important term to remember here is Modified Adjusted Gross Income (MAGI). If you're not familiar with this term you can find your MAGI by looking at:

Line 37 on your IRS 1040  or  Line 21 on your 1040A  or  Line 4 on your 1040EZ
Or can consult your tax professional.

The limit for a single taxpayer is a MAGI of $75,000 or less. The limit for married taxpayers is a MAGI of $150,000 or less. Keep in mind that there are partial tax credits available for taxpayers who exceed the income limits. Use IRS Tax form 5405 to help determine this amount.

 

 

#5 Do I have to wait until April 2009 to claim my credit?

No. You have the choice to claim your credit on your 2008 taxes or wait until you file your 2009 taxes. Even if you have already filed 2008 taxes you can file an addendum to receive your credit.

 

 

***Please note that it is always advisable to consult with your tax professional when looking for advice regarding your taxes***

 

www.SamSellsTucson.com

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Janna Scharf
Keller Williams Realty Coeur d'Alene - Coeur d'Alene, ID
Coeur d'Alene Idaho Real Estate Expert

It is driving me CRAZY that I can't find more people to take advantage of this tax credit.  It is such a phenominal opportunity right now!

Mar 16, 2009 05:04 PM #2
Rainer
8,089
Samantha Lorefice
Tierra Antigua Realty - Tucson, AZ
REALTOR , e-PRO, SFR

Brenda- That's why I decided to do a bog post on the subject. I have also found that people don't understand it. My company just came out with a nice flyer with details on the credit. I may decided to include it in a mailing. I am definitely going to have it available at open houses. You may consider putting something together yourself or ask a lender to help you do that.

 

Coeur- I agree with you completely. When the credit first came out, I did a post card mailing to renters in one subdivision I work frequently. I received NO calls from it. I think people are just afraid there is some fine printor something attached to it. Just a theory though :) I sure wish I was a first time homebuyer right now!

Mar 17, 2009 05:14 AM #3
Anonymous
david allen

Thanks for the great information. It is 2009 now and I have already filed my 2008 taxes. I won't close on my new home until May 10, 2009. Can I file an addendum this year after April 15? My Agents says that I have to wait to file for the tax credit on my 2009 Taxes...

Please help

Thank you!!

 

 

Apr 12, 2009 05:30 AM #4
Rainer
8,089
Samantha Lorefice
Tierra Antigua Realty - Tucson, AZ
REALTOR , e-PRO, SFR

David-

Your agent my very well be correct. I hesitate to ever give tax advice since I am not a tax professional. But I felt it important to mention the ability to file an addendum in order to receive your first time home buyer incentive. I highly rec commend consulting a tax professional to find out for sure what the rules are in filing an addendum to your 2008 taxes or if you need to wait until 2009. Best of luck with your closing and congratulations on becoming a home owner!

Apr 15, 2009 07:57 AM #5
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Rainer
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Samantha Lorefice

REALTOR , e-PRO, SFR
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