If you’re considering buying your first home, it’s a great time to buy—and it just got even better! Thanks to the federal government’s stimulus package, first-time buyers AND current home owners are entitled to a tax credit equal to 10% of the cost of the home! For first time buyers the amount could be up to $8,000, for current home owners the amount could be up to $6500! The restrictions that apply are pretty simple and should include most people. The ones who don't qualify for the full amount could be entitled to a graduated amount.Facts
The new credit is an $8,000 refundable tax credit for 1st time buyers ($6500 for "step up" buyers) or up to 10% of the purchase price. Refundable means that if your total tax liability in the given year is less than your credit, the IRS will send a refund check for the balance. Yes, if you usually get a couple grand for a tax return, you would tack on the additional tax credit. CASH IN YOUR POCKET!!
Examples
• If you owe $5,000 in taxes, the $8000 credit eliminates your tax liability, and you’ll receive $3,000 back (assuming you bought a house worth more than $80,000; it is 10% of the purchase price up to $8,000).
• If you have no tax liability, you get $8,000.
• If you are due a refund of $1,000, you get $9,000 total back. Please consult your tax advisor regarding your specific situations.
• If If you utilize revenue bond financing, you can use the tax credit.
• If There’s no repayment as long as you don’t sell the home within three years of purchase. If you choose to do so, the entire amount of credit is due back to the government at the time of sale.
• If You cannot buy your home from a close relative such as a spouse, parent, grandparent, child or grandchild.
• If It can be claimed on your 2009 Tax Return (to be filed by April 15, 2010), an amended 2009 Tax Return, or your 2010 Tax Return.
Qualifications
1) You are a first-time homebuyer. If you (and your spouse, if filing jointly) haven’t owned a principal residence in the past 3 years, you qualify.
2) You are a current home owner and you sell your current residence for another one. Existing or new! You must have owned your home for 5 of the last 8 years.
• You must purchase a single-family home that will be your primary residence (meaning you spend 50% or more of your time there). This includes condos, townhouses and co-ops.
• It must also be in the U.S.
• You meet the increased income limits that have been redefined in the extension. (Call for the actual income limits).
Now is a great time to buy! Consult a tax advisor to see how the credit impacts you personally. To find your perfect home, contact your favorite Real Living agent today! (Hopefully that's me!)
