Does the New Home Buyer Tax Credit Apply to Me?

If you’re like most of us, you may be a little confused about the homebuyer tax credit in the new stimulus bill. We’re going to try to clear up the confusion! (That being said, please keep in mind that we are licensed real estate professionals, *not* tax professionals so be sure to confirm everything with your accountant.)

Here are the key facts:
· The amount of the new tax break is $8,000.
· It applies to first-time homebuyers, and those who have NOT owned a principle residence during the three-year period prior to the purchase. Ownership of vacation property or rental property does not disqualify home buyers from this program.
· Homes have to be purchased between January 1, 2009 and December 31, 2009. (Yes it is retroactive! If you have already closed escrow and taken possession in 2009 you can take advantage of this credit.)
· No repayment is required for homes sold after 36 months of occupancy and ownership.

Wow! Here are a few more details:

• To qualify for the full tax credit, married couples' modified adjusted gross income (MAGI) should be under $150,000 and single filers' MAGI should be less than $75,000. Partial tax credits may be available for married couples with MAGI incomes of over $150,000 but under $170,000 and single filers with incomes over $75,000 but under $95,000. If married couples who qualify for the first-time tax credit file separately, they would both claim 5% of the home purchase or $4,000 each (whichever is less) on their tax returns.
  


• Home buyers who qualify for this program, but who do not intend to purchase a home till the end of 2009, may elect to alter their tax withholdings (up to the amount of the of the tax credit) in order to save up money for a down payment. However, if the purchase of the home does not occur, the taxes must be repaid to the IRS.
  


• The effective date of purchase for new construction (even if buyer owns title to the lot) is the date the owner first occupies the house. So even if construction began in 2008, as long as the home and buyers qualify for the tax credit, they will be eligible if they take possession any time during 2009. However, new construction bought from the builder is only eligible if the settlement date (closing) takes place between January 1, 2009 and December 31, 2009.
  


• The law allows taxpayers to elect to treat qualified 2009 purchases as a 2008 purchase so that they can receive the tax credit on their 2008 tax returns.
  


• The full amount of the eligible tax credit is refunded to the buyer, regardless of whether the buyer has paid an equivalent amount in taxes.
  
  I hope this is helpful!

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Source: National Association of Realtors, NewQuestCity.com