The United States government wants to pay you to buy your first home in 2009. As part of the massive economic stimulus package recently approved by Congress, first-time homebuyers will receive a tax credit up to $8,000.00 for purchasing a home between January 1, 2009 and December 1, 2009. This credit may be taken on either your 2008 or 2009 tax returns.
The 2009 homebuyer credit is a true “refundable” tax credit, which means that: (1) the taxpayer gets to take the credit whether or not they owe that much in taxes and (2) the taxpayer does not have to pay it back. This is a substantial improvement over the $7,500.00 tax “credit” passed by the Bush Administration in 2008. If you bought your home in 2008 you will be able to take a $7,500.00 tax credit, but you will have to pay it back over fifteen years. In essence, the 2008 credit was not a credit at all but a zero-interest loan from the government.
There are some limitations on the 2009 credit. First, the amount of the credit is limited to 10% of the purchase price of the home or $8,000.00, whichever is less. With the exception of some condos and small houses, however, most homes will max out the credit. Second, the credit is limited to single homebuyers with an adjusted gross income of $75,000.00 or married buyers with an AGI of $150,000.00 or less. Taxpayers with higher incomes may be eligible for a reduced credit. Third, taxpayers must own the home for at least three years. If you sell your home within three years, you may have to repay the credit to the government. Lastly, the credit is only available to first-time homebuyers. This may not be quite as limiting as you think, however, as the term “first-time homebuyer” is defined as any person who has not owned a primary residence in the last three years. If you owned a home more than three years ago, you may still qualify. Even if you currently own other real estate, such as investment property or a vacation home, you may still qualify for the credit.
For more information about the First-Time Homebuyer Tax Credit, contact Attorney Chris Ratté at ChrisRatte@RatteLaw.com.
