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
The $7,500 tax credit is available for first-time home buyers only.
The law defines a first-time home buyer as a buyer who has not owned a home during the past three years. All
U.S. citizens who file taxes are eligible to participate in the program.
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.
For married couples filing a joint return, the income limit doubles to $150,000.
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.
Married couples who earn between $150,000 and $170,000 are eligible to receive a partial first-time home buyer tax credit.
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
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
Types of Homes that Qualify for the Tax Credit
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.
The tax credit essentially serves as an interest-free loan to be repaid over 15 years.
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.
If the home owner sold the home, then the remaining credit would be due from the profit of the home sale.
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!