Every day this week we are sharing with you good reasons why you should buy a home.
Today we are continuing to discuss the tax breaks associated with buying a home
6. Credit for first-time home buyers. If you purchased a primary residence after April 8, 2008, and before July 1, 2009, and are a "first-time" home buyer, you can qualify for a new tax credit for 10% of up to $75,000 of the purchase price. To be eligible, you must not have owned a residence in the U.S. in the previous three years. Nor can the credit be taken if your mortgage is funded with tax-free bonds that states and localities issue to give below-market mortgages.
The credit phases out between $150,000 and $170,000 of AGI for married couples and $75,000 to $95,000 for single filers. It is refundable to the extent it exceeds your regular tax liability -- which means that if the credit more than offsets your tax liability for the year, you'll get a refund check for the balance -- but does not offset the AMT. If you buy your home in the first five months of 2009, you can elect to take the credit on your 2008 income tax return.
Beware: This credit is more like an interest-free loan from Uncle Sam rather than a gift, because it will be recaptured ratably over 15 years. The recapture period starts two years after the year the credit is claimed. Thus, if you claim a $7,500 tax credit for a purchase in 2008, you will have to pay an extra $500 of income tax in 2010 and in subsequent years until you have repaid the full $7,500. If you sell the residence before the credit is fully repaid, the balance is due in the year of the sale. (If your profit on the sale is less than the unrecaptured credit, though, the amount due is limited to the amount of your profit.)
7. First-time home buyer tax credit of $8,000. If you have not owned a home in the last 3 years, you can get paid $8,000 to purchase a home. Unbelievable. I am still astounded by this.
President Barack Obama signed the American Recovery and Reinvestment Act into law . This stimulus package is enormous and has many facets. I’d like to focus on just one aspect of this law: the first-time home buyer tax credit.
First-time home buyers who purchase a home between January 1, 2009 and November 30, 2009 will be eligible to receive up to an $8,000 tax credit. This money does not have to be repaid. The home must then be used as the buyer’s primary residence for the next 3 years (otherwise the tax credit does need to be repaid).
This is a great opportunity for first-time home buyers to buy a home. Combine this with the current buyer’s market and low interest rate and this truly is one of the best times to buy.
At HOPE we help our client’s everyday in making wise decisions regarding their credit. If you would like to know more about how the HOPE program works please give us a call at 704-503-3669. We are waiting on your call.
