$7,500 Tax Credit for First-Time Home Buyers in the new Housing Stimulus Bill
July 31st, 2008 categories: Buying Real Estate, Market Trends, Mortgage Help, Real Estate News
Among the many items in the Housing and Economic Recovery Act of 2008 that are designed to help real estate and the overall economic market is a temporary $7,500 tax credit for first-time homebuyers. Here is a fact sheet prepared by Gregory S. Brown, Assistant Staff Vice President for Government Affairs of the National Association of Home Builders .
First-Time Home Buyer Tax Credit Fact Sheet
Who is Eligible
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The $7,500 tax credit is available for first-time home buyers only.
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The law defines a first-time home buyer as a buyer who has not owned a home during the past three years. All
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U.S. citizens who file taxes are eligible to participate in the program.
Income Limits
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Home buyers who file as single or head-of-household taxpayers can claim the full $7,500 credit if their adjusted gross income (AGI) is less than $75,000.
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For married couples filing a joint return, the income limit doubles to $150,000.
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Single or head-of-household taxpayers who earn between $75,000 and $95,000 are eligible to receive a partial first-time home buyer tax credit.
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Married couples who earn between $150,000 and $170,000 are eligible to receive a partial first-time home buyer tax credit.
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The credit is not available for single taxpayers whose AGI is greater than $95,000 and married couples with an AGI that exceeds $170,000.
Effective Dates for the Tax Credit
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First-time home buyers would receive a $7,500 tax credit for the purchase of any home on or after April 9, 2008 and before July 1, 2009. To qualify, you must actually close on the sale of the home during this period.
Tax Credit is Refundable
- A refundable credit means that if you pay less than $7,500 in federal income taxes, then the government will write you a check for the difference.
- For example, if you owe $5,000 in federal income taxes, you would pay nothing to the IRS and receive a $2,500 payment from the government.
- If you are due to receive a $1,000 tax refund from the government, your refund would grow to $8,750 ($1,000 plus $7,500 from the home buyer tax credit).
- Buyers can take the tax credit in their 2008 or 2009 tax return.
- If you purchased the home in 2008, the tax credit is taken on your 2008 tax return. If you buy in 2009, you have the option of taking the credit on your 2008 or 2009 tax returns.
Types of Homes that Qualify for the Tax Credit
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All homes, whether single-family, townhomes or condominium apartments will qualify, provided that the home will be used as a principal residence and the buyer has not owned a home in the prior three years. This also includes newly-constructed homes.
Payback Provisions
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The tax credit essentially serves as an interest-free loan to be repaid over 15 years.
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For example, a home buyer claiming a $7,500 credit would repay the credit at $500 per year. However, the buyer doesn’t have to start repaying the credit until two years after the tax year in which the credit is claimed.
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If the home owner sold the home, then the remaining credit would be due from the profit of the home sale.
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If there was insufficient profit, then the remaining credit payback would be forgiven.
For more details on the tax credit, go to http://www.federalhousingtaxcredit.com/
I hope this information helps you better understand this part of the new housing stimulus package. As always, for any questions about buying or selling real estate, you can give me a call (979-571-3553 cell) or drop me an email in my inbox (JasonJ@Century21BCS.com). Definitely call me if you will be a first-time home buyer. There has never been a better time to buy than right now!
When it comes to this bill it doesn’t matter now if we think it is good for the nation as a whole anymore but it should be good for our business. I hope buyers take advantage of what is offered and BUY BUY BUY!
Hi, I am really confused about this, when I went to get my taxes done today, they said I bought a home this year in Oct 08, the credit, is for 6900 she said not 7500 as the house sold for 69000 so is it 1000 for every 10,000.00 up to 7500.00? Why when you go to the website it says it been up graded to 15000.00 credit, Please help me understand. Thanks
how can I check on the status of the refund?
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