WHAT IS A FIRST-TIME HOME BUYER?
Ends in April 2010
I'm Glad you asked...
The $8000 tax credit for first-time homebuyers was extended through April 30, 2010 and more people are included, including a $6500 tax credit offered to homebuyers who have lived in their current residence at least five years and who want to “trade up” (buy a new primary residence).
President Obama just signed the economic stimulus package in Denver, CO which includes a gift for first time homebuyers– $8,000 (or 10% of the home’s value, whichever is less) on their 2008 or 2009 taxes.
Here’s the skinny, from CNN:
- Refundable: The credit is refundable, meaning tax filers see a refund of the full $8,000 even if their total tax bill - the amount of withholding they paid during the year- was less than that amount.
- Purchase Date: To qualify for the credit, the purchase must be made between Jan. 1, 2009 and Nov. 30, 2009. Buyers may not have owned a primary home (lived in it) for the past three years to qualify as “first time” buyer. They must also live in the house as their primary residence for at least three years, or they will be obligated to pay back the credit.
- Paperwork: Applying for the credit will be easy - or at least as easy as doing your income taxes. Just claim it on your return. No other forms or papers have to be filed. Taxpayers who have already completed their returns can file amended returns for 2008 to claim the credit.
- Income Restrictions: To qualify, buyers must make less than $75,000 for singles or $150,000 for couples. (Higher-income buyers may receive a partial credit.)
Have questions about the $8,000 tax credit? Ask ‘em in Zillow Advice.
To find out more about the first time buyer's tax credit check the IRS site.
Questions You Might Have:
Q. Can I apply for the credit if I bought a vacation home or rental property? A. No. Vacation homes and rental property do not qualify for this credit.
Q. Are there income limits? A. Yes. The credit is reduced or eliminated for higher-income taxpayers. The credit is phased out based on your modified adjusted gross income (MAGI). Different income limits apply to purchases on or before Nov. 6, 2009 and those after that date.
For purchases on or before Nov. 6, 2009, for a married couple filing a joint return, the phase-out range is $150,000 to $170,000. For other taxpayers, the phase-out range is $75,000 to $95,000. This means that the full credit is available for married couples filing a joint return whose MAGI is $150,000 or less and for other taxpayers whose MAGI is $75,000 or less.
For purchases after Nov. 6, 2009, for a married couple filing a joint return, the phase-out range is $225,000 to $245,000. For other taxpayers, the phase-out range is $125,000 to $145,000. This means that the full credit is available for married couples filing a joint return whose MAGI is $225,000 or less and for other taxpayers whose MAGI is $125,000 or less. (11/19/09)
Q. I purchased a duplex home with two separate dwelling units. I will live in one dwelling and will rent out the other dwelling unit and report the rental income on Schedule E. May I qualify for the first-time homebuyer credit, and what amount do I use for the purchase price to determine the amount of the credit? A. Yes, you may qualify for the credit for the dwelling unit that you use as your principal residence. To determine the amount of your credit, you must allocate the purchase price of the duplex between the two separate dwelling units. You may not use the entire purchase price of the duplex to determine the amount of your credit.
Q. Does previously inheriting a home and living in it automatically disqualify me as a first-time homebuyer if I buy a different home on or before Nov. 6, 2009? A. Yes, an ownership interest in a prior principal residence would bar you from being considered a first-time homebuyer. As long as you owned and used the prior home as your principal
Q. If a taxpayer purchases a mobile home (manufactured home) with land and qualifies for the credit, is the amount of the credit based on the combined cost of the home and land? A. Yes. The first-time homebuyer credit is ten percent of the purchase price of a principal residence. The total purchase price (mobile home and land) is used to determine the amount of the first-time homebuyer credit.
Q. Can a taxpayer who purchases a travel trailer qualify for the credit? A. A travel trailer that is affixed to land may qualify as a principal residence.
Q. Are there income limits?
A. Yes. The credit is reduced or eliminated for higher-income taxpayers.
The credit is phased out based on your modified adjusted gross income (MAGI). MAGI is your adjusted gross income plus various amounts excluded from income—for example, certain foreign income. For a married couple filing a joint return, the phase-out range is $150,000 to $170,000. For other taxpayers, the phase-out range is $75,000 to $95,000.
This means the full credit is available for married couples filing a joint return whose MAGI is $150,000 or less and for other taxpayers whose MAGI is $75,000 or less.
Q. Who cannot take the credit?
A. If any of the following describe you, you cannot take the credit, even if you buy a main home:
Your income exceeds the phase-out range. This means joint filers with MAGI of $170,000 and above and other taxpayers with MAGI of $95,000 and above.
You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.
You stop using your home as your main home.
You sell your home before the end of the year.
You are a nonresident alien.
You are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year.
Your home financing comes from tax-exempt mortgage revenue bonds.
You owned another main home at any time during the three years prior to the date of purchase. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another main home at any time from July 2, 2005, through July 1, 2008.
For First-time Homebuyers Credit: Scenarios Click Here
The new law also:
- Authorizes the credit for long-time homeowners buying a new principal residence.
- Raises the income limitations for homeowners claiming the credit.
Programs for first-time buyers - There are several local or federal government programs that help first time buyers get into the housing market. Ask me about these options.
Credit or tax problems. Do you have problems with your credit rating or owe money in taxes? Buying your first home is still a possibility. Check with your lending institution about options, such as paying a higher down- payment. I have access to lenders that may be able to raise your credit rating thus making the first-time home buyer a reality for you. Contact Me
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