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Tuesday, February 17, 2009

$8,000 Home Buyer Tax Credit at a Glance

Here is the info on the new $8000 Home Buyer Tax Credit:

  • *The tax credit is for first-time home buyers only.
  • *The tax credit does not have to be repaid.
  • *The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
  • *The credit is available for homes purchased on or after January 1, 2009 and before December 1, 2009.
  • *Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.
FederalHousingTaxCredit.com


Here is the info that I found that pertains to my situation:


Who is eligible to claim the tax credit?

First-time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and before December 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner.

Are there any income limits for claiming the tax credit?

The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008?

The most significant difference is that this tax credit does not have to be repaid. Because it had to be repaid, the previous "credit" was essentially an interest-free loan. This tax incentive is a true tax credit. However, home buyers must use the residence as a principal residence for at least three years or face recapture of the tax credit amount. Certain exceptions apply.

If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?

Yes. The law allows taxpayers to choose ("elect") to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.

Taxpayers buying a home who wish to claim it on their 2008 tax return, but who have already submitted their 2008 return to the IRS, may file an amended 2008 return claiming the tax credit. You should consult with a tax professional to determine how to arrange this.



Check out the website for more FAQs.

Once I close on my house I will amend my 2008 taxes to claim the $8000 credit. Thinking off the top of my head, I will most likely use some of it towards paying off the remainder of my credit card debt and the rest would go towards my E-Fund.


RESOURCES

Recovery.gov



4 comments:

Tired of being broke said...

Doing the amended return sounds like the best idea. At least this way you will have the cash sooner rather than later.

Congrats again on the home purchase.

Dimples said...

@ Tired

Yeah definitely great idea and opportunity. I am still trying to figure out what I will do with it. Wanna make sure I work it to the best of my advantage.

Thanks

Sheena said...

yep, my husband already did our taxes and we closed on our home on jan. 30th 2009; so he'll probably do the amended return as well.

Good Luck.

Les@SpillingBuckets said...

I was just about to research this, lol. Thanks for doing the grunt work.

We might buy a house this year too. (the photo of your new hous looks really nice) :)