There is no better time to buy a home than right now, especially if you are a first time home buyer. The good news is that you can be a first time home buyer a second time. (nothing like a second chance). So even if you have owned a home in the past you may be qualified to receive this $8000 tax credit. When I first read about the tax credit I took it very literally to mean you must be a first time home buyer. However in the case the definition of a first time home buyer for the purpose of this law is “a first time home buyer is a buyer who has not owned a principal residence during the three year prior to the purchase (the date on the HUD 1 is the determining factor). For married taxpayers neither spouse may have owned a home in the last 3 years.
I recently had a closing where my client had previously had a home but had gone through a divorce and was just now able to buy a home again. I called her to let her know that she was again a first time home buyer. She was excited to know about this because just like me she thought a first time home buyer was only a first time home buyer.
There are a few other items that you should keep in mind. This only goes to Dec. 1st 2009 so if you are going to buy a home this year you need to shop early. You don’t want to wait until the last moment and then take the chance of not closing on time and losing out on the tax credit.
There are income limits. Full credit will be issued to individuals with an adjusted gross income of no more than $75,000 ($150,000 on a joint return). Individuals with incomes over $95,000 ($170,000 on a joint return) will not receive the credit.
Unlike the 2008 credit (which was essentially an interest free 15 year loan) the 2009 tax credits DOES NOT have to be repaid. You do however have to live in the house for at least 3 years.
This is a tax credit, not a tax deduction. A tax credit is a dollar for dollar reduction in the amount of tax the taxpayer owes. If you owed $8000 in federal income tax and received the full $8000 tax credit, you would owe nothing to the IRS for that filing period.
This tax credit is said to be refundable. This means that a credit can be claimed even if the taxpayer has little or no income tax liability to offset. For example if a first time homebuyer had a tax liability of $6000 and received a tax credit for $8000 you would receive a check for $2000.
The finite points of the tax credit are still being worked on. You will want to check with your tax advisor for a complete interpretation.
For all your Spring TX Real Estate needs, contact me today!
Marchel Peterson
Results Realty
Cell: 832-721-8332
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