Saturday, November 14, 2009, PM | 1 Comment
As we all know by now, the $8,000 tax-credit for first-time home buyer has been extended by the U.S. Congress as of November 6, 2009. It is a true dollar-for-dollar tax credit of up to $8,000 for 10% of the cost of a home. Even if your income is low and you don’t have to pay taxes for 2009 tax-year, you would still get the $8,000 as refund from IRS.
New home buyer:
This time around, the credit begins to disappear for taxpayers with modified Adjusted Gross Incomes (AGI) of or more than:
- $125,000 for a single person
- $225,000 for married couples
Homes bought for more than $800,000 by new owners are not eligible for the tax credit no matter if you are single taxpayer or married filing jointly whether you meet the above cap or not.
Already own a home:
The new law also authorizes a similar $6,500 credit for buyers who already own a home. It too is a refundable credit for 10% of the purchase price of a house costing no more than $800,000.
To qualify the buyer has to have owned and lived in the same home for five of the eight years preceding the new home purchase, and the new home must become the buyer’s principal residence.
Time-frame for eligibility:
Under the new law, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2010 and close on the home by June 30, 2010. For qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 return.
In a Nutshell
Are the folks whose AGI is more than $125,000 as single taxpayers and more than $225,000 as married couple, nuts that they have not bought their first home previously with so much money in their pockets.
The important thing is if your AGI is less than the cap and you buy your first home for less than $800,000, then you are eligible for the tax credit. Read IRS article First-Time Homebuyer Credit Updated Nov. 6, 2009, to reflect new legislation.
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