Buying a home is a big step. Fortunately, a trained professional Realtor® , like myself, is willing and able to help you through the process. In addition to the many benefits of homeownership, the homebuyer tax credit and more affordable prices make now an especially opportune time to purchase. Still, the commitment is a substantial one, and the National Association of Realtors® encourages you to ask questions and be informed about the decision you are making so that the home you buy is a home you can enjoy for years to come.
Am I eligible?
First-time homebuyers who purchase a principal residence on april 9, 2008 and before april 30, 2010 are eligible. If you (and your spouse, if married) have not owned your principal residence for a 3-year period before your purchase, and you have never taken advantage of the Dc first-time homebuyer credit, you qualify as a first-time homebuyer. Starting November 7, 2009, repeat buyers who have lived in their primary residence for five of the last eight years can also qualify for a tax credit. the credit for repeat buyers also expires
How does it work?
Like all tax credits, it will directly reduce the total amount of taxes you owe. When you file your taxes, for the year you purchased your home, you will be able to subtract the amount of the credit from your Federal income tax liability, increasing the size of your refund or reducing the amount you owe. For example, you file your ‘normal’ tax return and find that you owe $2,000 in taxes. With this credit, your tax liability could be lowered by $8,000—which means, you instead get a $6,000 tax ReFUND check from the IRS.
How big is the tax credit?
The tax credit is equal to 10% of the purchase price of your home up to $8,000 for first-time buyers and up to $6,500 for repeat buyers.
The full credit is available for single individuals whose adjusted gross income is less than $125,000. If your adjusted gross income is greater than $125 ,000 and your home purchase qualifies you for the full credit, the credit phases out according to the dollar amount (or percentage if less than $8,000 as would be the case for repeat buyers).
What else is new?
Income limits have been raised for the extended and expanded tax credit (effective November 7, 2009). a new limit of $800,000 has been placed on the purchase price of homes. the original version of the tax credit had a payback provision. the repayment provision is completely gone from credits for purchases in 2009 and 2010, but a mild recapture provision remains. If you sell your home within 3 years of purchase, the entire amount of the credit is recaptured, that is, the government takes it back. also, purchases by dependents are not eligible for the credit as of November 7, 2009. Finally, purchase documentation must now be attached with the tax form in order to claim the credit.
