Real estate agents have been asked many questions about the new First Time Home Buyer Tax Credit, so here is a clear explanation of what it is, who qualifies, and how those who qualify get their money. To read up on the background of this tax credit, read our previous post titled “New and Improved Tax Credit for Buying a Home.”
WHAT IS IT… AND WHO QUALIFIES?
The 2009 version of the tax credit allows folks who have not owned a primary residence in the past three years to receive a refundable credit of $8,000 (or up to 10% of the purchase price, whichever is less). Those who close on their homes between January 2, 2009 and November 30, 2009 can claim this tax credit. Because it is a true refundable tax credit, there is no repayment requirement! Woohoo!
SO… WHAT DOES REFUNDABLE MEAN?
This tax credit is refundable, which means that if your total tax liability in the given year is less than $8,000, the IRS will send a refund for the balance. Because most folks don’t have $8,000 or more in tax liability, most will receive the full credit!
WHO DOESN’T QUALIFY?
- Joint filers with Modified Adjusted Gross Income (MAGI) of $170,000 and above, and single filers with MAGI of $95,000 and above.
- Folks who buy a home from a close relative: spouse, parent, grandparent, child, grandchild.
- Those who stop using their home as their primary residence.
- Those who sell the home before the end of three years.
- Non-resident aliens.
WHEN CAN THIS TAX CREDIT BE CLAIMED?
This credit can be claimed on your 2008 tax return, 2008 modified tax return, or 2009 tax return.
If you have further questions, or want to read up on the fine print, click here, or contact us! We’ll be happy to answer any questions for you.