First Time Home Buyers…Do You Want An Extra $8,000?
April 11th, 2009 categories: Buyer Resource
YOU may be eligible to receive a free $8,000 from the U.S. Government!
Let me repeat…
YOU may be eligible to receive a free $8,000 from the U.S. Government!
The American Recovery And Reinvestment Act that was signed into law on February 17, 2009, allows for some great provisions for First Time Home Buyers. The government passed this law to help alleviate the over supply of homes for sale.
The largest provision allows for First Time Home Buyers to receive an $8,000 Income Tax Credit. An Income Tax Credit is not a writeoff, rather, it is a dollar for dollar reduction of your income tax liability. This means that if you owe $10,000 to the IRS, the $8,000 would be deducted, and you would only owe $2,000. Wow…that is a huge savings.
This is truly great news. What if you only owe $5,000 in taxes?…what happens to the other $3,000? The Government has defined this credit as a “Refundable Credit” and will actually send you the balance of any unused amount of the $8,000 in the form of a check. Some restrictions do apply, some of which are covered below:
Who qualifies? Here are some high level facts about the program…
- The date of the home purchase MUST be ON OR AFTER January 1, 2009, and BEFORE December 1, 2009.
- The home must be located within the United States.
- There is NO repayment of tax credits required.
- First Time Home Buyers are those home buyers who are purchasing a home who have had no legal ownership interest in a home in the 3 years prior to the closing date of the 2009 purchase.
- Some income restrictions do apply: Individuals who file a 1040 as “Single” of “Head Of Household” are eligible for the entire tax credit if their “income” does not exceed $75,000. Married couples who file Joint Returns are eligible for the entire tax credit if their combined “income” does not exceed $150,000.
- Income is determined as the AGI; Adjusted Gross Income on the 1040 Tax Return. AGI is the final number that appears on the bottom line of the of the front page of the IRS 1040 Form.
- Individuals with incomes higher than $75,000 and those filing joint returns with incomes higher than $150,000 can take advantage of the tax credit on a prorated basis. Ex: if a single person’s income is $80,000 they are eligible for a partial credit. There is a $20,000 “buffer” zone for income. So the math would look like this. $80,000 – $75,000 = $5,000 in excess income. $5,000 / $20,000 = 25%. So…25% of the credit WOULD NOT be allowed to be used, and in this case (or the case of a married could filing jointly earning $155,000) only $6,000 of the tax credit can be claimed. The $20,000 “Buffer Zone” is the same for those filing as single head of household, or married filing jointly.
- Other restrictions can be found by visiting FAQ
You can download the Tax Credit Form by clicking on IRS First Time Home Buyer Tax Credit Form
This Tax Credit DOES apply to home purchases in California, and specifically Sonoma County. Visit us at WineCountryMoves.com to find out more about Sonoma County Real Estate.
Very good to know! Thanks Chris!