The refundable tax credit enacted for the 2009 tax season will allow first time home buyers, or buyers who are considered first time home buyers (have not owned a home in 3 years) to claim a credit up to $8,000 on their taxes. If you are getting money back on your taxes, you will get even more. If you would normally pay, this will offset your tax liability.
The tax credit was enacted to help get rid of existing inventory in the housing market and is a change to the existing $7500 tax credit. The previous tax credit was in the form of a forgivable loan – the new $8,000 credit does not have to be paid back.
In order to qualify for the credit, you simply have to buy a “first” home in 2008, make less than $75,000 (or $150,000 married filing jointly), and talk to your tax preparer. If you have special circumstance which apply to you or are subject to withholding, you may want to talk with your accountant on how this tax credit can benefit you.
In order to fully qualify and avoid recapturing the tax credit, you must move into the property (and own it) prior to December 1, 2009 and must maintain it as your primary residence for at least 3 years. Special circumstances are allowed for the 3 year occupancy but it is best to plan for 3 years of occupancy.
Table Below provided from information by the National Association of Realtors®
|
FEATURE |
CREDIT AS CREATED JULY 2008 APPLIES TO ALL QUALIFIED PURCHASES ON OR AFTER APRIL 9, 2008 |
REVISED CREDIT – EFFECTIVE FOR PURCHASES ON OR AFTER JANUARY 1, 2009 AND BEFORE DECEMBER 1, 2009 |
|
Amount of Credit |
Lesser of 10 percent of cost of home or $7500 |
Maximum credit amount increased to $8000 |
|
Eligible Property |
Any single family residence (including condos, co-ops, townhouses) that will be used as a principal residence. |
No change |
|
Refundable |
Yes. Reduces (or can eliminate) income tax liability for the year of purchase. Any unused amount of tax credit refunded to purchaser. |
No change |
|
Income Limit |
Yes. Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000). |
No change |
|
First-time Homebuyer Only |
Yes. Purchaser (and purchaser’s spouse) may not have owned a principal residence in 3 years previous to purchase. |
No change |
|
Revenue Bond Financing |
No credit allowed if home financed with state/local bond funding. |
Purchasers who utilize revenue bond financing can use credit. |
|
Repayment |
Yes. Portion (6.67% of credit or $500) to be repaid each year for 15 years, starting with 2010-tax filing. |
No repayment for purchases on or after January 1, 2009 and before December 1, 2009 |
|
Recapture |
If home sold before 15-year repayment period ends, then outstanding balance of repayment amount recaptured on sale. |
If home is sold within three years of purchase, entire amount of credit is recaptured on sale. Applies only to homes purchased in 2009. |
|
Termination |
July 1, 2009 |
December 1, 2009 |
|
Effective Date |
Purchases on or after April 9, 2008 and before January 1, 2009. Repayment to begin for 2010 tax year. |
All revisions are effective as of January 1, 2009 |
