$8,000 First-Time Home Buyer Tax Credit
Extended to April 30, 2010!
NOW is the time to purchase your first home!
Interest rates are lower than they have been in 40 years.
Home inventories in the Dayton area are high.
The tax credit gives you up to $8,000 cash for buying your first home.
This is a tax credit not a tax deduction. If after preparing your taxes you are due a refund of $1,000, your credit will be added and you'll receive $9,000. If you end up owing $1,000, you will receive $7,000.
On November 6, 2009, President Obama signed the Worker, Homeownerhip and Business Assistance Act of 2009. This Act builds on the American Recovery and Reinvestment Act of 2009 by (1) increasing the tax credit income limits; (2) tightening documentation requirements; and (3) extending program deadlines to April 30, 2010. It continues to provide new homebuyers with a one-time tax credit of $8000 or 10% of the purchase price, whichever is less.
Here are some things you need to know:
1. AVAILABLE TO FIRST-TIME HOME BUYERS. Buyers must be at least 18 and not a dependent of another taxpayer. Also, Buyers may not have owned a principal residence within the three-year period prior to purchase.
2. FOR THE PURCHASE OF A PRINCIPAL RESIDENCE. Single-family detached homes, attached homes like tonwhouses and condominiums, manufactured homes/mobile homes and houseboats.
3. FOR A PROPERTY WITH A MAXIMUM SALE PRICE OF $800,000.
4. FROM A SELLER WHO IS NOT A CLOSE RELATIVE OF THE BUYER. This includes a spouse, parent, grandparent, child or grandchild.
5. BINDING CONTRACT BY APRIL 30, 2010. Purchaser must have a written binding Contract to Purchase in effect between November 6, 2009 and April 30, 2010 - but will have until June 30, 2010 to close.
6. TAX CREDIT AMOUNT. (1) Single taxpayer who earns less than $125,000 - credit = $8,000 or 10% of home purchase price, whichever is less. (2) Married couple filing joint tax return who earns less than $225,000 - credit = $8,000 or 10% of home purchase price, whichever is less. (3) Married couple filing separate tax returns who each earn less than $125,000 - credit = $4,000 each or 10% of home purchase price, whichever is less.
7. HUD IS NOW ALLOWING MONETIZATION OF THE TAX which means that HUD allows buyers using FHA-insured mortgages to apply their anticipated tax credit toward their home purchase immediately, rather than waiting until they file their 2009 or 2010 income taxes to receive a refund. These funds may be used for certain downpayments and closing cost expenses.
8. HOW YOU RECEIVE YOUR TAX DOLLARS. Purchaser must use IRS Form 5404 and attach the HUD-1 settlement form to the tax return. Also, a tax credit is a dollar-for-dollar reduction in what the taxpayer owes. The credit is claimed on Buyer's federal income tax returns and reduces the tax liability - it is subtracted from the total tax owed. AND, if any credit amount remains, the unused amount will be refunded as a check to the Buyer.
9. THIS IS A CREDIT AND DOES NOT REQUIRE REPAYMENT unless the home is sold within 3 years of the purchase date.
* The tax credit amount is reduced to zero for taxpayers with a modified adjusted gross income (MAGI) of more than $145,000 (single) or $245,000 (married) and is reduced proportionally for taxpayers with MAGIs between those amounts.
Please note that this document is a summary of the major provisions of the Act. As with any tax law, please check with a tax advisor if you have questions.
