If you’re still on the fence about acquiring a home, then Uncle Sam has just thrown an extra incentive for those of you that’s still debating on waiting further or buying — a nice fat, $8,000 incentive (it’s not $15,000 but you take what you can get, eh?) via the home tax credit.
Since they’ve been throwing around a bunch of different numbers and qualification scenarios, here’s the fairly-certain low down on the new home buyer tax credit.
To Qualify for the $8,000 “First-Time” Homebuyer Tax Credit:
- Home purchase must be made between January 1, 2009 and November 30, 2009.
- Must be a “first time buyer.” In order to qualify for this status, you must not have owned a home for the past three years.
- You must also live in the purchased house for at least three years, or you’ll be obligated to pay back the tax credit.
- Homebuyers must make less than $75,000 for single tax filers, or $150,000 for couples.
- Higher-income buyers will receive a partial tax credit, but details have not yet been fully released.
- Single family residence purchases (condominiums, townhouses, co-ops) that will be used as a principal residence will qualify.
How to Claim the Homebuyer Tax Credit:
- Simply claim it on your tax return. You will not have to filed any other forms or papers. If you’re not a procrastinator like me and you’ve already filed your taxes, you can simply file an amended return for 2008 to claim the credit.
- What type of tax credit is it? It’s one of the better type: a refundable one. This means that if you don’t owe any taxes, you will get any excess credit in the form of a fat refund check. Example: If you owe $1,000 in taxes, you’ll get a $7,000 refund check. If you’ve overpaid $1,000 in taxes, then you’ll get a $9,000 check. You can read more about refundable tax credit in the resource link below.
- If you’ve already claimed last year’s $7,500 tax credit, then you won’t be able to claim the $8,000 credit on next year’s return. It’s one credit or the other, buddy.
- Unlike the previous $7,500 tax credit, there’s no repayment required for this $8,000 tax credit! (Unless of course you sold your house within three years, as stated earlier).
Other Miscellaneous Notes:
- If you’re buying into a retirement community, unfortunately, the purchase won’t qualify for the $8,000 first-time homebuyer tax credit.
This post will be updated as the IRS release further details upon their interpretation of the just-passed American Recovery and Reinvestment Act.
Regardless if you think the first-time homebuyer tax credit in the stimulus bill is a smart move or that it’s entirely bullsh*t — the tax credit will certainly be a nice bonus for those that are looking to purchase a home in 2009.
- What ‘refundable tax credit’ means – Birds & Bills