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Carver Communications - Index

Carver Communications - 5.1.09 - Index

By Trish Kosmolski
Affiliated Bank Mortgage
Tax Credit For 1st Time Homebuyers
In its efforts to stimulate the economy
and revive the housing market,
Congress has enacted legislation providing
a tax credit of up to $8,000 for firsttime
home buyers.
But time is of the essence for buyers
who want to take advantage of this
opportunity. Only homes purchased on or
after January 1, 2009 and before
December 1, 2009 are eligible.
The American Recovery and
Reinvestment Act of 2009 allows firsttime
buyers to claim a credit worth $8,000
- or 10% of the home’s value, whichever is
less - on their 2008 or 2009 taxes.
Buyers may not have owned a home
for the past three years to qualify as “first
time” buyer. They must also live in the
house for at least three years, or they will
be obligated to pay back the credit. Certain
exceptions may apply. What is the definition
of a first time homebuyer? The law
defines “first time homebuyer” as a buyer
who has not owned a principal residence
during the three-year period prior to the
purchase. For married tax payers, the law
tests the homeownership history of both
the home buyer and his/her spouse.
Additionally, there are income
restrictions: The tax credit amount is
reduced for buyers with a modified adjusted
gross income (MAGI) of more than $
75,000 for single tax payers and $150,000
for married tax payers filing a joint return.
The tax credit amount is reduced to zero
for tax payers with MAGI of more than
$95,000 (single) or $170,000 (married)
and is reduced proportionally for taxpayers
with MAGIs between these amounts.
What types of homes will qualify
for the tax credit? Any home that will be
used as a principal residence will qualify
for the credit.
Many have asked how the homebuyer
tax credit is different from the tax
credit congress enacted in July of 2008?
The most significant difference is that this
tax credit does not have to be repaid.
Because it had to be repaid, the previous
“credit” was essentially an interest-free
May 1, 2009 REAL ESTATE NEWSLINE 19
loan. This tax incentive is a true tax credit.
Is the tax credit the same as a tax
deduction? No. A tax credit is a dollar-for
dollar reduction in what the taxpayer
owes. That means a taxpayer who owes
$8,000 in income taxes and who receives
an $8,000 tax credit would owe nothing to
the IRS.
Applying for the credit will be easy
- or at least as easy as doing your income
taxes. Just claim it on your return. No
other forms or papers have to be filed.
Taxpayers who have already completed
their returns can file amended returns for
2008 to claim the credit.
If you are a first time home buyer,
now would be a good time to consider
buying your first home.
Prices have never been lower.
The interest rates are low.
You get to deduct the $8,000.00 to
purchase your new home.
If you have additional questions
please call Trish Kosmalski at 210-348-
8100.
The eyes have it…and everywhere you go, someone is looking at
Real Estate Newsline! ERA Legend Realty’s Lisa Marie Heman and
Debbie Bouchard check out the publication with Jack Shull of
Affiliated Bank Mortgage.