Posted on Aug 13th, 2009 in Home Buying
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With home prices down and interest rates at historically low levels, now is a great time to buy a home – and if you’re a first-time homebuyer, 2009 just may be your year. Read on to learn more about the tax credit and how to qualify
In February, Congress passed a federal income tax credit for those who qualify as first-time homebuyers. And the best part? The credit doesn’t require repayment. However, time is of the essence, because you must close on your new home by November 30th of this year – less than 100 days away!
How can you jump on this opportunity? Here are a few things you need to know about the credit, and what will qualify you as a first-time homebuyer:
A “first-time home buyer” is someone who hasn’t previously owned a principal residence, or hasn’t owned for three years before buying a house. So if you’ve owned a vacation home–but not a principal residence–within the past three years, you would still qualify for the credit.
The amount of the homebuyer federal income tax credit is the lesser of 10% of the cost of the home bought or $8,000.
The tax credit is effective for purchases on or after January 1, 2009 and before December 1, 2009. If you bought the home in 2008, you are not eligible.
In order to be eligible for the tax credit in full, the homebuyer can have an annual adjusted gross income of no more than $75,000 ($150,000 on a joint return). A homebuyer with an annual adjusted gross income above that level and up to $95,000 ($170,000 on a joint return) is eligible for a reduced tax credit.
There is no repayment for the tax credit; however, if the home is sold within three years of purchase, the entire amount of credit is recaptured on sale.
before you sign the dotted line, make sure you’re educated on the market and have gone through all the steps to make sure you’re ready to buy a home.
If you’ve got specific questions or individual concerns about the first-time homebuyer tax credit, please contact your real estate agent or financial advisor.
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