Homebuyer Tax Credit – The bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009.  The credit does not require repayment.  Most of the mechanics of the credit will be the same as under the 2008 rules:  the credit will be claimed on a tax return to reduce the purchaser’s income tax liability.  If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.

Chart Highlighting the Major Modifications to the First-Time Homebuyer Tax Credit> (PDF: 309K)

Who will this apply to?
The credit will apply to First time home buyers. A taxpayer is considered a first-time homebuyer if he (or spouse, if married) had no present ownership interest in a principal residence in the U.S. during the 3-year period before the purchase of the home to which the credit applies. The first-time homebuyer credit phases out for individual taxpayers with modified AGI between $75,000 and $95,000 ($150,000-$170,000 for joint filers) for the year of purchase.

What time frame is the credit good for?
The home must be purchased between January 1, 2009 and December 1, 2009.

How do I know how large my Credit will be?
The credit is base on 10% of the sales price and caps at $8,000. For example, if you purchase a property for $50,000 the buyer would be eligible for a $5,000 credit. If a property is purchase for $80,000 the buyer would receive an $8,000 credit. The program caps at $8,000 so a property purchased for $100,000 the buyer would be eligible for $8,000.

How did I get my refund?
It is filed with your taxes. Eligible first-time homebuyers who purchase a principal residence after Dec. 31, 2008, and before July 1, 2009, may elect to treat the purchase as made on Dec. 31, 2008. Otherwise credit will be filed with your 2009 tax returns. Please contact your tax advisor for additional details.

What is the difference between the $7500 credit and the new $8000 credit?
The main difference between the credits is the new $8000 credit may NOT need to be paid back. The case it would need to be paid back would be if you did not reside in the property for 3 years.

Can I purchase a duplex?
Yes, but the property must be owner occupied for at least 3 years.

Adam Turriff
REALTOR
ERA Titletown, REALTORS