The facts about the first time home buyer's tax credit as created by the latest bailout plan are trickling in slowly. We've been hesitant to write anything before now because the story kept changing. Here is the latest news I was able to put together based on emails from a few sources I trust. Here is the skinny:
Who is Eligible for the tax credit?
- The $8,000 tax credit is available for first¬time home buyers only.The law defines a first¬time home buyer as a buyer who has not owned a home during the past three years.
- All U.S. citizens who file taxes are eligible to participate in the program.
What are the Income Limits?
- Home buyers who file as single or head¬of¬household taxpayers can claim the full $8,000 credit if their modified adjusted gross income (MAGI) is less than $75,000.
- Here is what Wikipedia has to say about MAGI.
- For married couples filing a joint return, the income limit doubles to $150,000.
- Single or head¬of¬household taxpayers who earn between $75,000 and $95,000 are eligible to receive a partial first¬time home buyer tax credit.
- Married couples who earn between $150,000 and $170,000 are eligible to receive a partial first¬time home buyer tax credit. The credit is not available for single taxpayers whose MAGI is greater than $95,000 and married couples with an MAGI that exceeds $170,000.
Effective Dates for the Tax Credit:
First¬time home buyers would receive a $8,000 tax credit for the purchase of any home on or after January 1, 2009 and before December 1, 2009. To qualify, you must actually close escrow during this period.
Tax Credit is Refundable... this is a good thing!
A refundable credit means that if you pay less than $8,000 in federal income taxes, then the government will write you a check for the difference. Yippee.
- For example, if you owe $5,000 in federal income taxes, you would pay nothing to the IRS and receive a $3,000 payment from the government.
- If you are due to receive a $1,000 tax refund from the government, your refund would grow to $9,000 ($1,000 plus $8,000 from the home buyer tax credit).
You are allowed to claim the credit for a purchase in 2009 on your 2008 tax returns. Consult your tax person. Note we did not say consult your tax software.
Types of Homes that Qualify for the Tax Credit:
All homes, whether single¬family, town-homes condos or loft will qualify, provided that the home will be used as a principal residence and the buyer has not owned a home in the prior three years. This also includes newly¬constructed homes.
For more details on the tax credit, go to www.federalhousingtaxcredit.com
Hope this info helps. On tax issues, please consult a professional. I can handle the real estate questions but all those tax laws make me crazy.
Best to you... especially if you are lucky enough to be at Mardi Gras like a few friends I know.
Gene Urban
The Urban Team at Realty Executives
Your real estate guys for Phoenix, Downtown, Central, North and more.
602-234-5777