First-Time Homebuyer Tax Credit
First-Time Home Buyer Tax Credit - Summary of Tax Provision
Home Buyer's Credit Expanded and Enhanced. For 2008, first-time home buyers who satisfied certain income thresholds were eligible for a refundable credit of up to $7,500 for purchases of a principal residence after April 8, 2008 and before 2009. However, this credit had to be paid back to the government in equal installments over 15 years, or earlier if the house was sold of ir the purchaser failed to use the home as a principal residence. Caution! These rules (including the 15-year payback requirement) still apply to qualifying home purchases after April 8, 2008 and before 2009. However, for qualifying home purchases after 2008 and before December 1, 2009, the new law expands and enhances the credit by: 1) increasing the maximum credit from $7,500 to $8,000 (not to exceed 10% of the home's purchase price), 2) eliminating the 15-year payback requirement, 3) requiring recapture of the credit upon the sale of the residence or failure to use the residence as a principal residence only where the sale or change of use occurs within 36 months of the date of purchase, 4) extending the deadline for qualifying purchases from June 30, 2009 to November 30, 2009, and 5) allowing the credit for qualifying homes bought with proceeds from tax-exempt mortgage revenue bonds. Tax Tip. The credit offsets both alternative minimum tax (AMT) and regular tax liabilities.
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How Do The Credit Limits Apply? Under the 2009 Rules, the amount of the credit is the lessor of 1) $8,000 ($4,000 if you are married filing separately), or 2) 10% of the home's purchase price. The credit is phased out as your adjusted gross income (AGI) increases from $75,000 to $95,000 if you are single, or from $150,000 to $170,000 if you are married filing jointly. Tax Tip. Since the credit is refundable, you will actually get a refund to the extent the credit exceeds your tax liability.
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Who Is A Qualified First-Time Home Buyer? You are a "first-time home buyer" if neither you nor your spouse has owned an interest in a principal residence in the U.S. during the 36-month period ending on the date of the purchase of the current residence. Tax Tip. Even if you or your spouse previously owned a home, you can still qualify for the credit, if that ownership ended at least three years before the purchase of the current residence. Planning Alert! You generally will not qualify for the credit if: 1) you purchase your home from a related party (e.g., certain family members), or 2) the home is not located in the U.S. Tax Tip. Your principal residence could include a condominium, houseboat, or mobile home.
This is a complex tax law. I am not giving tax adivce. I recommend you consult your tax advisor.
