 |
Tags: finance, property tax, home buyer tax credi
 If you’re a first time home buyer and are planning to purchase your own home between now and December 1st of 2009 or have already purchased your home since January 1, 2009, then you may be qualified to receive an $8,000 tax credit. This home buyer tax credit is one of 10 key provisions of the American Recovery and Reinvestment Act which was recently signed into law by President Obama on Feb.
17, 2009. The recovery bill provides $8,000 to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. Since this is a tax credit it does not require repayment. Most of the mechanics of this program will be the same as under the 2008 rules: you may claim it in your return to reduce your tariff liability.
advertisement
And the good thing is if there’s any left over that sum will then be refunded back to you. But more about that later. To qualify for this tax credit you need to be a first time home buyer. You also need to purchase or have purchased a home between January 1, 2009 and December 1, 2009.
To be a “first-time home buyer” you or your spouse should not have owned any residence during the three years prior to the purchase. Qualified homes includes single family dwellings, townhouses or condominium apartments and co-ops, including newly constructed homes and houseboats, and should be located within the United States.
The maximum allowable sum for home buyers is $8,000. The amount you qualify for is determined by two factors. The first factor is the price of the home. The sum is equal to 10% of the purchase price of the home, up to $8,000. So if you bought a home for $50,000 you will get $5,000; conversely if the home is worth $100,000 you get the maximum $8,000.
The second factor is your income. The amount of the tax credit decreases as your income approaches the maximum limit. If you’re single or head of household with a modified adjusted gross income (MAGI) of up to $75,000 ($150,000 for married couples) you are eligible for the maximum sum. However, if you’re single or head of household and your MAGI is between $75,000 and $95,000, (between $150,000 and $170,000 for married couples) you are only eligible for a partial sum.
Unfortunately, it is not available if, as a single or head of household, your MAGI is above $95,000 (above $170,000 for married couples). You can also get some cash flow benefits out of this. If you believe that you are eligible for this, in whole or in part, then you can adjust your income withheld through your employers, or adjust your quarterly estimated tariff payments.
By decreasing your withholding or quarterly payments, you will get an increase in your take home pay. And as we said earlier, since this is a tax credit it is refundable. This means that if your federal income tax payable is less than the $8,000, assuming you get the maximum amount, you will get a refund check for the difference.
So if your amount payable is only $5,000 you will get a refund check for $3,000. We also said that you wouldn’t need to pay anything back. However, there is one caveat. If you claimed it and then sold your home within 3 years of purchase, then you would be required to pay back the full amount you took out.
This is to prevent house flipping. Remember, you also need to close the deal and take ownership of or move into your new home by December 1st in order to claim it. You still have time to avail of this tax credit. Look for your home now.
About the author
The author of this article Rick Goldfeller is a successful underground Financial Analyst who has been advising and coaching individuals for many years. Rick recently published a book on how to manage your money and attract Wealth and Financial Freedom. More info on his Finance Planning course is available HERE.
Share this article
You may reprint this article in its entirety on your web site, newsletter or ezine, providing you leave the About the author sections intact. You may not alter the contents.
|
|
