Here is a simple explanation of the First-Time Home Buyer Tax Credit that is part of the just signed Stimulus Plan.
Essentially, first-time home buyers within certain income limits who purchase a home in 2009 before December 1, 2009 will receive a tax credit of up to $8,000.
· To qualify as a first-time home buyer as defined in the programs, the purchaser (and the purchaser’s spouse) may not have owned a home in the three years prior to the purchase date of the home. Single family homes qualify for the program. The home must be the primary residence.
· The tax credit is subject to adjusted gross income limitations as follows: full credit for AGI less than $75,000 if single or less than $150,000 if married filing jointly; phased out for AGI up to $95,000 single/ $170,000 joint.
· The amount for the credit is the lesser of 10% of the home purchase price or $8,000.
· The $8,000 credit will not need to be repaid.
· No portion of the $8,000 credit is due upon sale of the home, if the home is owned for more than three years. If the home is sold within the first three years, the full amount of the credit is due upon sale.
The program is similar to the $7,500 tax credit which applied to home purchases made in 2008 after April 9. Some differences are noted below:
· While a purchaser still owns the home, the $7,500 credit must be repaid in equal payments over a period of 15 years, starting with the 2010 tax filing.
· Upon sale of the home, any portion of the $7,500 credit not yet repaid is due in full.
· The $7,500 credit was not available to any purchaser utilizing state/local revenue bond money to help finance the home purchase. There is no such restriction on the $8,000 credit.
· Under both the $7,500 and the $8,000 programs, the credit will be claimed on the purchaser’s income taxes. Any amount in excess of taxes owed will be refunded to the purchaser.
