Introduction
Did you know that right now is a great time for first time homebuyers to enter the Real Estate market? The competitive prices of existing homes coupled with the first time homebuyers tax credit, up to eighteen thousand dollars (state and federal) for those who qualify, makes it a really attractive for first time homebuyers to own their own home. But remember, the first time homebuyers tax credits will only be available to properties that close before December 1, 2009, so the time is now. To find out if you qualify for the first time homebuyers tax credit, or if you would like to discuss your options as a first time homebuyer in today’s real estate market, schedule a FREE no obligation consultation.
The Basics
First-time home buyers who purchase a home to be used as a primary residence before December 1, 2009 are eligible for a tax credit equal to 10 percent of the value of their home purchase up to $8,000. To qualify as a “first-time home buyer” the purchaser and his/her spouse (if applicable) may not have owned a residence during the three years prior to the purchase. The credit is subject to income limits. Single buyers with incomes up to $75,000 and married couples with incomes up to $150,000 may receive the maximum tax credit. The credit decreases for single buyers who earn between $75,000 and $95,000 and for married buyers filing jointly who earn between $150,000 and $170,000. Home buyers earning more than the maximum qualifying income—over $95,000 for singles and over $170,000 for couples are not eligible for the credit. Unlike the credit for homes purchased in 2008, the tax credit for purchases in 2009 does not need to be repaid unless it ceases to be the primary residence of the tax credit recipient within three years after the purchase. In that case, the credit recipient will owe the full amount of the credit at that time the income tax return for the year the home ceased to be your principal residence is due. (i.e. You sell your home on January 1, 2010 or December 31, 2010; the full amount of the credit is due when your tax return is due on April 15, 2011.)
Available at Closing!
You may have heard that some states make the funds for the tax credit available for the borrower at closing. This is particularly helpful for cash strapped borrowers who need to cover closing costs. However, this option is supported on the state level, and is NOT available in California at this time.
More Information
Of course sometimes it’s nice to go straight to the source. The IRS has some helpful web pages on the tax credit, too. Check out the overview page.
Also be sure to visit the “Scenarios” section of the question and answer page for guidance on issues such as splitting a credit between non-married persons, having cosigners, how to handle the credit for married couples. For further clarification, consult with a tax attorney.
The tax credit is a great opportunity for first-time buyers, but it is only available for a limited time. To see if you qualify or would like further information, please contact me for a consultation.
Joseph Capote
Filed under: Buyer's Blog
Joe Capote 