Tax Credit expires! 12/09

The new 2009 tax credit has been a great incentive for first time home buyers but it expires at the end of the year. The credit is maxed at $8000 and it never has to be repaid. In comparison, the 2008 tax credit was for $7500 but had to be repaid over 15 years. The 2008 credit seemed to have a luke warm reception from potential purchasers. Those that did take advantage of the 2008 plan must be a little upset considering this change would have put free money in their pockets. I wouldn’t be surprised to see some exemption to this. Home buyers now have three strong incentives to get into the market. 1. Low interest rates. 2. Low home prices (2002 levels). And 3. An $8000 tax credit from Uncle Sam. See details on the credit below.

• 2009 First-Time Home Buyer Tax Credit Fact Sheet 
• 1. New buyers: The tax credit included in the economic stimulus is equivalent to 10 percent of the purchase price of the home–although it’s capped at $8,000–and applies only to first-time home buyers and principal residences. Buyer’s who haven’t owned a home in the previous three years will also be considered. But unlike the 2008 $7,500 home buyer tax credit, this one does not have to be repaid.
• 2. First time buyers defined: For the purpose of this legislation, a “first-time home buyer” is someone who hasn’t owned a principal residence for three years before buying a house. (The date of purchase is considered the day that the title is transferred.) That means if you’ve owned a vacation home–but not a principal residence–within the past three years, you would still qualify for the credit.
• 3. 2009 buyers only: Only those who purchase a home on or after January 1 and before December 1, 2009 are eligible for the credit. Anyone who bought a home last year won’t be able to take advantage of it.
• 4. Income limits: The tax credit is subject to income limitations. Single buyers need a modified adjusted gross income of $75,000 or less to qualify for the full credit, that’s $150,000 for married couples. Those earning more than these thresholds may be eligible for reduced credits.
• 5. Refundable: Because the tax credit is “refundable,” qualified buyers can take advantage of it even if they don’t have much tax liability.
• 6. Recapture: Buyers have to own the home for at least three years in order to capitalize on the credit. If they sell the home before then, they will have to return the credit to the government. (Exceptions will be made in certain cases, such as death or divorce.)
• 7. Types of Homes that Qualify for the Tax Credit: All homes, whether single-family, townhomes or condominium apartments will qualify, provided that the home will be used as a principal residence and the buyer has not owned a principal residence in the prior three years. This also includes newly-constructed homes.