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$8,000 Tax Credit for 1st Time Home Buyers
President Obama signed the $787 billion dollar stimulus bill. The new law refers to the tax credit as a first-time homebuyer tax credit. According to the law, a first-time homebuyer is defined as someone who has not owned a primary place of residence in the past for three years prior to the date of purchase of the new home. That's not what most people thought first-time homebuyer meant. This new definition opens up the tax credit to many more buyers.
Here is what you need to know to “QUALIFY”:
1. The home must be purchased in 2009.
2. The home must be your primary residence.
3. The person buying the home must not have owned another primary residence for at least 3 years prior.
1. The $8,000 is subtracted from the money you owe the federal government when you file your personal tax return in April of 2010. (It's a refundable tax credit so you would even get a refund check if your total federal tax is less than $8,000)
2. You can take advantage of the Tax Credit relative to your 2008 Tax Year:
3. The Tax Credit can be applied against your 2008 Tax Return that is generally filed on or before April 15, 2009.
4. If you have already filed your 2008 Tax Return, you can immediately amend your return once you purchase a home and you should receive a refund in 30 to 60 days.
5. If your home closing is scheduled to occur after April 15, 2009, you can choose to file an extension to October 15, 2009 to file your 2008 Tax Return to take advantage of the Tax Credit and receive your refund
6. FHA financing ONLY: if you received or are planning to receive a loan from a family member to use towards the down payment of your home the refund you may receive as a result of the Tax Credit can assist you in paying them back in a timelier manner.
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To get started with the Qualification and Home Finding process contact us at 404-810-1800
Frequently ask Questions:
What is the definition of a first-time homebuyer?
You are considered a first-time homebuyer if:
- You purchased your main home located in the United States after April 8, 2008, and before December 1, 2009.
- You (and your spouse if married) did not own any other main home during the 3-year period ending on the date of purchase.
What is the definition of main home? Does a condo count? How about an RV?
Your main home is the one you live in most of the time. It can be a house, houseboat, house trailer, cooperative apartment, condominium, or other type of residence.
What if I don’t owe or pay any income taxes?
This is a refundable tax credit, which means that even if you don’t owe any taxes, you will receive the credit amount via check or other means. For example, if before this credit you had a tax liability of $5,000 and withheld $4,000, you would owe the IRS $1,000. If you qualify and claim a $8,000 tax credit, you would now receive $7,000.
What are the income restrictions?
The amount of the credit begins to gradually phase out for taxpayers whose adjusted gross income is more than $75,000, or $150,000 for joint filers. It is completely phased out when your AGI is $90,000, or $170,000 for joint filers.
Can I just buy a home from a relative and pocket the $8,000?
You don’t qualify for the tax credit if you bought the house from a “related person.” According to the IRS, a related person includes:
- Your spouse, ancestors (parents, grandparents, etc.), or lineal descendants (children, grandchildren, etc.).
- A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock of the corporation.
- A partnership in which you directly or indirectly own more than 50% of the capital interest or profits interest.
How do they determine the purchase date as applied to the cut-off dates?
If you bought an existing home, the date of purchase is your closing date, not the day that you sign a purchase contract or enter escrow. If you constructed a new home, you are treated as having purchased it on the date you first occupied it. (Seems like some wiggle-room here.)
What IRS Form Do I Have To Fill Out? Can I File For 2008 or 2009 Tax Years?
That would be the new revised version of IRS (where most of this information is from), which you fill out and attach to Form 1040. Any updated tax preparation software should be able to handle this. If you already bought your house in 2009, you can file either on your 2008 or 2009 tax returns. (Why not get it now?)
What if two unmarried people buy a house together?
If two or more unmarried individuals buy a main home, they can allocate the credit among the individual owners using any “reasonable” method. The total amount allocated cannot exceed the smaller of $7,500 ($8,000 if you purchased your home in 2009) or 10% of the purchase price. A “reasonable” method is any method that does not allocate all or a part of the credit to a co-owner who is not eligible to claim that part of the credit.
I am not a U.S. citizen. Can I still claim the tax credit?
If you are a resident alien according to IRS and satisfy all the other requirements, then yes you can claim the credit.
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To get started with the Qualification and Home Finding process contact us at 404-810-1800
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