Jason Eid and Bryce Johnson, Published May 05 2009
New tax credit is an incredible deal for first-time homebuyersThere has been a lot of talk recently about Congress’ economic stimulus bill. While most of the talk has centered around who is getting what and how much, a key provision has not been getting the attention it deserves. That is, the provision that gives first-time homebuyers $8,000 to buy a house before Dec. 1, 2009.
With the passage of the American Recovery and Reinvestment Act, Congress authorized a tax credit to all first-time homebuyers in the amount of $8,000. There are a few specifics about this tax credit that make it such an incredible deal for homebuyers:
- The credit is available for home sales closed after Jan. 1, 2009, and before Dec. 1, 2009, and can be claimed on either an amended 2008 tax return or on a 2009 tax return.
- The homebuyer does not have to have paid $8,000 in taxes to receive the full amount. As long as it is at least 10 percent of the sale price, the taxpayer qualifies for the full amount.
- The $8,000 does not have to be repaid as long as the buyer lives in the home for at least three years.
- Another key provision is who qualifies as a first-time homebuyer. The definition of a first-time homebuyer is someone who has not owned a principle residence in the last three years. So this tax credit applies to those who have owned a home in the past but for whatever reason are now renting or some other circumstance.
- Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit. Individual taxpayers with incomes up to $95,000 and married couples with incomes up to $170,000 qualify for a partial tax credit.
Buying that first home is a big deal. More than likely it will be the biggest purchase anyone makes in life. Thanks to Congress, there are 8,000 reasons why it will be a little easier this year.
So while most of the media attention focuses around billions in bailouts or million-dollar golden parachutes, do not forget about the other benefits to the everyday consumer in the stimulus package. For more information on the tax credit, please talk to your local lender or visit www.federalhousingtaxcredit.com.
Even though it is a pretty straightforward tax credit, there are other specifics to be aware of. As always, it is a good idea to talk with an expert before making any big financial decisions.
Eid is president and Johnson is executive vice president of the Home Builders Association of Fargo-Moorhead.