In recent months, the federal government implemented one of the biggest financial incentives in history to assist 
first-time home buyers. Those who qualify for the credit can get up to $8,000. In order to get the tax credit, you have to know the rules. Here is a brief rundown of what you need to know about the home buyers tax credit:
December 1, 2009 – An Important Date
To qualify for the home tax credit, you must have purchased and closed on your home before December 1, 2009. If you are building a new home, you must be moved in to the home before December 1st. There is a possibility that Congress will extend the date for the tax incentive but in the event you are planning to take advantage as a first-time home buyer, don’t count on the extension.
First Time Home Buyers Only
Interestingly, this requirement isn’t as exactly cut and dry as it seems. For instance, if you purchased a home 15 years ago and sold it 10 years later and haven’t owned since, you can be considered a first-time home buyer and qualify for the tax credit. As long as you have not owned a home within three years of he date your purchased a home, you’re good to go.
Your Income May Count Against You
Depending on your income level, you may not get the full amount of the tax credit. You may still qualify for a partial credit if you make more than $75,000 single/$150,00 married.
Don’t Count on $8K
The maximum amount you can receive in credit is $8000 OR 10% of the purchase price of your home – whichever is less. Depending on the price of your home, you’ll have to do the math.
Don’t Pay-Backsies
In 2008, anyone who used the first time home-buyers credit had to pay it back over a period of 15 years. The 2009 version however does not have to be paid back and the credit is actually a refundable credit, meaning that if you only made a few thousand dollars and your total tax liability is only a few hundred for the year, your tax refund will increase by the full $8,000 credit, instead of being limited by your total tax liability. Please note: there is an exception to the no pay back rule. In the event you sell your home within a three year time period, you will have to pay pack the credit. This helps prevent flippers from abusing the system.
Related Content:
- Save For Later or Pay it Off Now? Â One of the most frequently asked finance questions people have is whether they should be paying off their debts or saving more towards their retirement. There really isn't a one-size fits all solution that will...
- Introduction to the IRA The IRA is an Individual Retirement Account that was originally created by the United States Congress as a means of providing retirement savings with tax advantages to workers that were not already being covered under...
- Citibank Agrees To Extend Free Checking Account Benefits Seeming to take courage from the implementation of the Credit Card Accountability, Responsibility and Disclosure Act (CARD) only this month, the Attorney General of New York, Andrew Cuomo, had this to say in response to...
- Suzie Says "Pay Off Your Home Mortgage" Suzie Orman is a famous financial planner who appears regularly on TV and is a prolific writer. I'm not a big fan, mostly because her ideas are too simplistic for me although they must appeal...
- Tax Tips To Save Money NEXT Year The following guest post is from Trisha Wagner. Trisha is a freelance writer for DepositAccounts.com, where you can compare rates from dozens of banks in one place. She writes regularly on the topics of personal...
Recent Comments