Do You Have Questions Regarding the First-Time Buyers Tax Credit?

We are still being asked about the new tax credit made available in the American Recovery and Reinvestment Act 2009. So, today, I am going to post some helpful information regarding the tax credit. The tax credit of 2009 differs from the tax credit of 2008 in three major ways. First, it is for a larger amount: $8,000 versus the previous credit of $7,500. Second, the tax credit is refundable. Third, a repayment of the tax credit is not required (restrictions apply).

Tax Credit:

* The tax credit is based on the sale price of the home purchased. Therefore, the maximum tax credit is $8,000. The median sales price for Ventura County was reported as $382,590 (January 2009). The tax credit for a home based on this price would be an approximate $3,820.
* The tax credit does not have to be repaid.
* The tax credit is refundable. If the amount you owe at tax time is less than the tax credit, the difference will be refunded to you.
* The tax credit is interest free.
* The tax credit is not a tax deduction. It is a dollar-for-dollar reduction in taxes.
* The tax credit only applies to homes which are the owner's principal residence.
* The tax credit is applied to any home purchased, new or resale, including foreclosed properties.
* The tax credit does not restrict the home purchase to single-family homes. Condos, townhouses, manufactured homes and houseboats also qualify.
* The tax credit applies to homes which you built in 2009 on land you already own or purchase for construction.
* The tax credit is available to first-time home-buyers who purchase a home in 2009. The home must close escrow no later than November 30,2009.
* The tax credit may be applied to your 2008 taxes. Please consult with your tax advisor.
* The tax credit must be paid back if the home is sold within the first three years of the date purchased.
* The tax credit must be paid back if the home is no longer your principal residence within the first three years.

Who qualifies:

* The home buyer must be a first-time buyer. A first-time home buyer is defined as anyone who has not owned a home in the last three years.
* Your income must be $150,000 or less if you are married or $75,000 or less if you are single.
* First-time home buyers whose income exceeds the $150,000/$75,000 income level may also qualify for a lesser tax credit. A couple making $160,000 would still qualify for a $4,000 tax credit. Please check with a qualified tax advisor if your income level exceeds $150,000/$75,000.
* First-time home buyers who are nonresident aliens (as defined by the IRS) are also eligible for the tax credit.

Note: If you are claiming the tax credit passed in 2008, the original terms still apply and the tax credit must be repaid. The $7,500 tax credit applies to homes purchased between April 1 and December 31,2008.