If you haven’t heard of this tax credit or maybe you are confused about the details, read this post to help familiarize yourself. The tax credit’s formal wording is “The American Recovery and Reinvestment Act of 2009”.
Below are some short facts describing the credit.
- The tax credit offers up to $8,000 for qualified first-time home buyers
- A first-time home buyer is someone who has not owned a home in the past three years prior to purchase
- Your spouse cannot have owned a home either
- Buying a vacation home or rental property (any non principal residence) does not qualify
- The credit includes single-family detached homes, attached homes (townhouses and Condos), manufactured homes, and houseboats.
- Unmarried joint purchasers can give the tax credit to the first-time buyer (Father and Son etc)
- The amount of credit is determined by the purchase price. The credit is 10% of the price. Maxing out at $8,000.
- Income Limits: $75,000 per individual and $150,000 per married couples.
- You may still get your tax credit if you don’t make the cut for $75,000 or $150,000, however the percentage goes down the more you make
- The tax credit percentage lowers to ZERO if you make $95,000 for a single person or $170,000 in a marriage.
- The income levels are defined as Modified Adjusted Gross Income (MAGI)
- You can find your MAGI by looking up your AGI (Adjusted Gross Income) on the last number of page 1 and first number on page 2 of your 1040 and 1040A tax forms. If you use a 1040-EZ, AGI is on line 4. (AGI includes all income: salaries, interest, dividends, and capital gain)
- To find your MAGI you should consult a tax professional, however it entails adding back student loan interest, foreign earned income and other more advanced deductions etc.
- The tax credit requires purchasing the home between or on January 1, 2009 and December 1, 2009
- The official purchase date is when the home closes and title transfers (must be within dates)
You might ask, “What is the difference between the tax credit from 2008?” The biggest difference is the fact that you do not have to repay anything. The other “Credit” from 2008 was really just a loan with no interest.
I have addressed the basic outline of the 2009 Tax Credit. If you have any more questions please feel free to send me an email. There are many circumstances that require additional research so make sure you understand the entirety of the credit by consulting a tax professional.
I am in no way a tax professional and all the information I have provided is simply for your basic knowledge and not legal or financial advice.