The new stimulus plan signed by Obama in February 2009 includes an addendum to the First Time Home Buyer Tax Credit of 2008. This updated plan raises the limit from $7500 to $8000 and does not have to be repaid to the government providing the purchaser “live in the home” and not sell it for a minimum of 36 months.
Here is the snapshot details of the $8000 first time home buyer tax credit:
- The tax credit is for first-time home buyers only.
- The tax credit DOES NOT have to be repaid.
- The tax credit is equal to 10 percent of the home’s purchase price (maximum of $8,000).
- The credit is available for purchases between January 1, 2009 and December 1, 2009.
- Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.
What does this mean to a first time home buyer?
If you make less than $75,000 (single) or $150,000 (married) and have not owned a home in the last 3 years – you should qualify for the full $8,000 tax credit as long as your purchase a home between January 1, 2009 and December 1, 2009. When you file your taxes you will be able to claim this tax credit and receive a full CREDIT (not deduction) for up to $8,000. In most cases this will be a refund check paid to you from the federal government.
Should I buy a home this year? The economy is down.
Use your best judgment on what you are comfortable with. If you are in fear of losing your job or cannot afford to purchase a house then don’t. If you are confident with your income and job status and are just waiting “till we are at the bottom” you should consider this year. Mortgage interest rates are low, home prices are down, and the government is offering you $8,000 to buy a home this year.
I can’t wait a full year to receive my tax credit – what are my options?
With the $8,000 tax credit you have 2 options to receive your credit before you file your 2009 tax return.
- The law allows taxpayers to choose to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that 2008 income limit applies. This allows the home buyer the ability to file his or her taxes for 2008 and receive the tax credit of the home purchased in 2009.
- Instead of receiving the tax credit as a lump sum during the end of the year a tax payer can adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. This means that the tax payer will increase their take home pay which will allow them to save up for their down payment. For details on this please see your CPA or tax adviser.
What if I purchased a home between April 9, 2008 and December 31, 2008?
You are still eligible for the original $7500 tax credit (that must be repaid) but you do not qualify for the new $8000 tax stimulus. Remember this bill is a stimulus which was created to stimulate the economy for new purchases and only applies to homes purchased (meaning the date of closing) between January 1, 2009 and December 1, 2009.
Contact Us for a FREE Buyers Consultation!
For more information about the first time home buyer tax credit click here – information provided by the National Association of Home Builders.
[...] Looking for information about the 2009 first time home buyer tax credit? [...]
I was wondering if contract sales or owner financed home sales qualify for the tax credit
Per the blog on cincinnati.com I see this answer:
First-time homebuyers do not necessarily have to go through a real estate agent to receive the tax credit. Homes that are “for sale by owner” also are eligible. However, individuals who purchase a home from a family member are not eligible.
Please settle a disagreement regarding the $8000 rebate for first-time home buyers. Will the $8000 be paid as a lump sum after purchase, or will it be in the form of lower taxes over a few years’ time?
I may be buying a home from my aunt and uncle, do they qualify as “family members”? or do you mean an immediate family member like a mom/dad/brother/sister?
I make $80k a year and just closed yesterday… that’s really messed up it should be on a sliding scale…
@Mary: lump sum when you file taxes for 2009 (or if you file an amendment to your 2008 taxes).
@Eric: its a sliding scale that bottoms out at 95k adjusted income – you should still qualify for something.