It is amazing how many people do not know about this tax credit. I hope to explain some of its basics below. It is a wonderful opportunity to get $8,000 for free! That, combined with some amazing deals on the market right now and low, low loan interest rates – there may never be a better time to buy a home than right now.
The homebuyer tax credit became law under American Recovery and Reinvestment Act on Feb. 17, 2009.
Main provisions of this bill are:
$8,000 tax credit is available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009.
- The credit does not require repayment.
- At this moment, the credit can be claimed on an income tax return to reduce the purchaser’s income tax liability and it cannot be used toward the down payment. (However, there is a potential of an additional law being passed shortly which will allow for a short term loan against this tax credit which can be used for the down payment. More details on this program could be released later this week.)
- If any credit amount remains unused, then the unused amount will be refunded to the buyer in a check.
- Purchaser and his or /her spouse may not have owned a residence during the three years prior to the purchase.
- Principal residence is defined as a single family home, condo, townhome or a coop.
- The credit represents 10% of the purchase price of the home, up to $8,000. As an example, If the purchase price of the home is $75,000, then the credit would only be $7,500.
- Full credit can be received by a single Buyer with income up to $75,000. (Married couples up to $150,000). Partial credit may be received by single Buyers earning between $75,000 and $95,000.($150,000 to $170,000 for couples filing jointly). No credit is available to anyone earning more than these amounts.
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