You may be eligible for a tax break when you purchase a home. The First Time Home Buyer Tax Credit is benefitting many people by making it more affordable to buy. Here’s what you need to know…
Are You Eligible?
If you purchase a primary residence between now and April 30, 2010, you are eligible. If you (and your spouse if applicable) haven’t owned a primary residence in a 3-year period before the current purchase, you qualify as a first time home buyer. Last November, it was decided that buyers who have lived in their primary home for 5 of the last 8 years also qualify for the credit.
How It Works
The credit directly reduces the total amount of taxes you owe. When filing your taxes for the year of your home purchase, you will subtract the amount of the Federal income tax liability. In doing so, you increase the size of your refund or reduce the amount you owe.
Funds At Closing
The Department of Housing and Urban Development created guidelines for FHA lenders that allow them to make the credit available to buyers to cover closing cosrs or a down payment above 3.5% required for an FHA insured loan. Meaning the credit can be available at closing no matter where you’re purchasing, as long as your lender participates in the program. Check with your lender to make sure they are on board.
How Big Is The Credit?
The tax credit is equal to 10% of the purchase price of your home up to $8,000 for first time buyers and up to $6,500 for most other buyers. A full credit is available for single individuals whose adjusted gross income is less than $125,000, and $225,000 for married couples filing jointly.
The purchase price of the home may not exceed $800,000. If you sell your home within 3 years of the purchase, the entire amount of the credit is recaptured (the government takes it back). You cannot clain both the DC and the national First time Homebuyer Tax Credit. Purchases by non-resident aliens are not eligible. The house must be under contract by April 30, 2010 and must close by June 30, 2010.
Take advantage of this phenomenal opportunity to purchase a home. Contact me with any questions or to get started on finding the right home for you!