The Homebuyer Tax Credit portion of the American Recovery and Reinvestment Act of 2009 provides an $8,000 tax credit to first-time home buyers (or buyers who have not owned a private residence in the past three years) who purchase a principal residence on or after January 1, 2009 and on or before November 30, 2009. The credit does not require repayment and will be claimed on a tax return to reduce the purchaser's income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser. |
What are the important points to know?
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- The Tax credit has been raised from $7,500 to $8,000 or 10% of purchase price (whichever is less)
- The credit does not require repayment
- First time home buyers or buyers who have not owned a home in the last 3 years
- To qualify, a single person must make less than $75,000 a year in income
- Joint ownership must make less than $150,000 a year in income to qualify
- Qualified buyers must purchase home on or after January 1, 2009 and no later than November 30, 2009
- The property must be the primary residence
- Purchaser must remain in home for 3 years or the credit will be recaptured at the sale of home.
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Are there restrictions for the home I want to purchase?
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- The primary residence can be a condo, single family detached, co-op, townhouse or something similar
- The home must be located in the United States.
- Vacation homes and rental properties are not eligible.
- For new construction, the "purchase date" is the date you occupy the home. So the move in date must be before December 1, 2009.
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Who is not eligible for the credit?
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- If your income exceeds the phase-out range. This means joint filers with Modified Adjusted Gross Income (MAGI) of $170,000 and above and other taxpayers with MAGI of $95,000 and above.
- You may not buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.
- Vacation homes and rental properties are not eligible
- If you stop using your home as your main home.
- If you sell your home before the end of three years.
- If you are a nonresident alien you are not eligible
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Recapture-3 Year Residency
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- If the home is sold prior to three years of ownership, the tax credit must be repaid at closing.
- This provision is designed to prevent flipping homes in order to get the credit.
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Other Provisions
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- Purchasers who utilize state/local revenue bond financing can now use the credit.
- Purchasers who bought before January 1, 2009 and received the previous $7,500 tax credit are still subject to the terms of that repayable credit.
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When Can I Claim the Credit?
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- It can be claimed on your 2008 Tax Return (to be filed by April 15, 2009), an amended 2008 Tax Return, or your 2009 Tax Return.
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