Schudegroup.com – Arizona Real Estate Blog

Great news!!!  The Home Buyer tax credit has been extended until April 30th, 2010 and it’s now even better…  Below are the details you need to know.

$8,000 First-time Home Buyer Tax Credit at a Glance

• The $8,000 tax credit is for first-time home buyers only. For the tax credit program, the IRS defines a first-time home buyer as someone who has not owned a principal residence during the three-year period prior to the purchase.
• The tax credit does not have to be repaid.
• The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
• The tax credit applies only to homes priced at $800,000 or less.
• The tax credit now applies to sales occurring on or after January 1, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.
• For homes purchased on or after January 1, 2009 and on or before November 6, 2009, the income limits are $75,000 for single taxpayers and $150,000 for married couples filing jointly.
• For homes purchased after November 6, 2009 and on or before April 30, 2010, single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

The $6,500 Move-Up / Repeat Home Buyer Tax Credit at a Glance

• To be eligible to claim the tax credit, buyers must have owned and lived in their previous home for five consecutive years out of the last eight years.
• The tax credit does not have to be repaid.
• The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $6,500.
• The tax credit applies only to homes priced at $800,000 or less.
• The credit is available for homes purchased after November 6, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, the home purchase qualifies provided it is completed by June 30, 2010.
• Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

This information was provided courtesy of www.federalhousingtaxcredit.com.  You can view additional information including frequently asked questions about the tax credits.

In 2008 congress enacted a $7,500 tax credit that was designed to help first time home buyers purchase homes.  The overall goal of the tax credit was to increase sales and reduce the high inventory of homes.  The $7,500 is required to be repaid back over 15 years.  This is like an interest free loan.

In 2009 congress  increased that amount to $8,000 to first time home buyers who purchase a home on or after January 1, 2009 and before December 1, 2009.  This is an improvement over the 2008 tax credit because they raised the amount by $500 and you will not have to repay the credit.

HOW DOES IT WORK? The buyer must purchase a home for $80,000 or more to qualify for the full tax credit.  If the home purchase  is less than $80,000 then the tax credit is based of 10% of the purchase price.    For example, if the home is $70,000, then the tax credit is $7,000.

The tax credit will reduce your income tax liability dollar for dollar on your tax return.  If you tax liability is less than $8,000 then you will be given check a from the IRS for the difference.  You should consult your tax advisor to make sure you meet all the conditions for the tax credit.

DO YOU QUALIFY? The tax credit is only for first time home buyers.  You must not have owned a property in the last 3 years to the day of your purchase.

WHAT IS THE INCOME LIMITATIONS? Buyers that file a  joint tax return must have an income no more than $150,000 to qualify for the full credit.  If you’re filing your returns individually then your income needs to be less than $75,000 to qualify for the full credit.

DO I NEED TO REPAY THE TAX CREDIT? No!  As long as you keep the home for 3 years.

Need more information?  Please call us at 480-201-9593 or send us an email at mike@SchudeGroup.com

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