First Time Home Buyers Tax Incentive

First Time Home Buyers Tax Incentive

First Time Home Buyers Incentive To Buy..Tax Credit.. What It All Means!

President Obama Is Heading To Denver To Sign The "American Recovery And Reinvestment Act Of 2009".

A lot has been said about this new bill. Some people are happy and others, not so much. There aren't enough changes from the original First Time Homebuyer Tax Credit that can really blow my hair back.

We previously had a $7500 tax credit available. The difference is that this one offers a non-payback plan as long as the borrower owns the home for over 3 years.

Here is the chart posted on the National Association of REALTORS®

FIRST-TIME HOMEBUYER TAX CREDIT

As Modified in the American Recovery and Reinvestment Act

Major Modifications Italicized

February 2009

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

All principal residences eligible.

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

Purchasers will continue to receive refund for unused amount when tax return is filed.

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

Same income limits continue to apply.

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

Still available for first-time purchasers only. Three-year rule continues to apply.

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

(But note program changes for 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

For those who have purchased in 2009, this bill is retroactive. You too can qualify for the credit.

If you are a first-time home buyer or know of one, please call, email or text me to see how you can take advantage of this tax credit and become a proud home owner soon!

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