If you will remember back in 2008 then President Bush signed a Homebuyer Tax Credit that was to stimulate home buying going into 2009. The Housing and Economic Recovery Act of 2008 authorized a $7,500.00 tax credit for qualified first-time home buyers purchasing homes on or after April 2008 and before January 1, 2009. The program has since expired but has been replaced with a much better and larger plan.
The Homebuyer Tax Credit offered today is as follows but changes may be on the way:
- 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 per cent of the home’s purchase price up to a maximum of $8,000.00.
- The credit is available for homes purchased on or after January 1, 2009 and before November 30, 2009.
- Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.
The program today is called the American Recovery and Reinvestment Act of 2009 and authorizes up to $8,000 tax credit for first-time home buyers purchasing a principal residence. Many people have questions about the program and below are some of the answers for our buyers.  Remember you should consult a qualified tax advisor or legal professional about your unique situation.
First time homebuyers purchasing any kind of home – new or resale – are eligible for the tax credit. The definition of a first time home or condo buyer is as follows; a buyer who has not owned a principal residence during the three year period prior to the purchase. For married buyers the test is of both home buyer and his/her spouse. This year’s tax credit is different from last year’s because it does not have to be paid back. This year’s tax credit is a true credit, not an interest free loan as was last year. However, the home buyer must use the residence as their principal residence for at least three years or possibly face a recapture of the tax credit amount. Claiming the tax credit has also been made easier. All you have to do is complete the tax credit on IRS form 5405 to determine the amount and then claim the amount on line 69 of your 1040 income tax return. No other applications and forms are needed.
Recently Congress passed a bill extending the Home buyer Tax Credit past the November 30 date for military, diplomatic and intelligence personnel serving overseas. The extension of this House bill paves the way for the continued tax credit and word is, offering an expansion of the entire program including offering the credit to a broader group of buyers, such as replacement home buyers whose income does not exceed some limit. Hopefully we will have word of the possible extension in the next few weeks but if you are interested in purchasing and meet the guidelines of the original program don’t hesitate to act now. You never know what Congress may do and you would not want to miss out on this opportunity.
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