On February 17, 2009, President Obama signed legislation that revises a Tax Credit for First Time Homebuyers. This tax credit is available on qualified home purchases from January 1, 2009 thru December 1st, 2009. This includes new and previously owned manufactured homes, modulars, mobile homes and park models.
We’ve gathered a few frequently asked questions on the Tax Credit below. If you have additional questions, please contact us today!.
1. What is the First time Home Buyer Tax Credit?
- A federal refundable income tax credit.
2. How much is the tax credit?
- 10% of the home’s purchase price, up to $8,000.00.
3. What is the definition of a First Time Home Buyer?
- A buyer who has not owned a principal residence during the three year period prior to the purchase of a home. If you are married, neither you nor your spouse may have owned a principal residence during the prior three years to qualify as first-time buyers.
4. What type of homes qualify for the tax credit?
- Any new or resale home purchased by an eligible first-time home buyer, provided that the home will be used as a principal residence. The home can be a manufactured home, a modular home, and be real or personal property. Second homes and investment properties do not qualify.
5. Are there time limits to be eligible for the tax credit?
- Yes. You must purchase a home on or after January 1, 2009 and before December 1, 2009.
6. Are there income limits to determine who is eligible to take the tax credit?
- Yes. Modified Adjusted Gross Income (MAGI) of up to $75,000 for single or head-of-household buyers and $150,000 for joint taxpayers. A lower, partial credit is available to buyers with higher incomes.
7. What is a “Refundable Tax Credit”?
- Refundable means the tax credit may be claimed by an eligible taxpayer even if you have little or no federal income tax due. Should that be the case, the IRS will issue a check to the home buyer for the difference between the tax due and the amount of the tax credit.
8. Does the tax credit have to be paid back to the government?
- There will be no repayment for purchases on or after January 1, 2009 and before December 1, 2009, provided the home is not sold for three years.
9. I heard there is a “recapture” feature in the provision. What does that mean?
- If the home is sold within three years of purchase, you will lose your tax credit eligibility and the entire amount of the credit will be recaptured (or “repaid” to the IRS) upon sale of the home.
10. Is the credit available for buyers with government sponsored downpayment assistance?
The information contained herein does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind nor should it be construed as such. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal or other competent advisors. Before making any decision or taking any action on this information, you should consult a qualified professional to whom you have provided all of the facts applicable to your individual situation or question. None of the tax information herein is intended to be used nor can it be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer. The information is provided “as is”, with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
