As you’ve probably heard, the federal government recently passed a tax credit available to first-time homebuyers. Although the tax credit is pretty straightforward, there are a few little quirks that you should know about:
- Who is a “first-time homebuyer”? The government considers a “first-time” buyer to be anyone who has not owned a home for the past three years – so, in reality, the tax credit is available to people who previously owned homes, as long as they haven’t been homeowners since about 2006.
- When does the home have to have been purchased? The tax credit only applies to homes that are purchased between January 1, 2009 and December 1, 2009.
- How much of a tax credit can you receive? The stimulus bill allows first-time buyers to claim a tax credit on their 2008 or 2009 taxes for $8,000 OR 10% of the home’s value, whichever is less. That means that homes worth less than $80,000 will receive a tax credit of less than $8,000.
- Are there any income restrictions on who can take the tax credit? Yes. Full credit is only available to first-time buyers that earn less than $75,000 for singles, or $150,000 for couples. However, a partial credit may be available to singles or couples that earn more than the income ceiling.
- How do I claim the tax credit? It’s easy! Just claim it on your return – and if you’re really ambitious and have already filed your return, then you can just file an amended return to take the tax credit.
- Will I have to pay back the tax credit? Maybe. Basically, the tax credit is yours to keep unless you live in the home for less than 3 years – then you have to pay it back.
Pretty cool, right? The tax credit is a great and unique deal available to you first-time buyers, so definitely be sure to take advantage of it on your tax returns! To find out a little bit more about the tax credit and how it might apply to you, just click here.