The federal government has created a way for 1st time home buyers to take advantage of a sluggish housing market. They have created a monitary inducement to get people off the bench and into homeownership. Hundreds of thousands of new buyers will be able to take advantage of this new tax incentive. You will be required to purchase a home on or before December 1st, 2009. In doing so, The federal government has created a way to jump start the poor housing market so as to clear out the large amount of unsold housing inventory nationwide.
This new tax credit is a so called "refundable" credit. Thus, if your actual tax liability was $2000, the new home buyer would receive a tax credit refund of $6000. The refundable amount is the difference between the $8000 tax credit and your tax liability, or what you owe. The term "tax liability" refers to the actual amount of tax computed on the tax return once all computations are complete. You may have already paid your tax liability through withholding at your job. If so, your rebate could be even larger! And, if you close on your new home before December 1, 2009, you could have your rebate by March!
Here are the specific details of the program:
1. If you have not purchased a home during the last 3 years and have been renting or are considering buying a home for the 1st time before June 30th 2009, you may take advantage of the tax credit. Your actual tax credit can be as much as $8,000 against your federal taxes for year 2009.
2. You are eligible for the credit if you are not a current homeowner or have sold your previous home over 3 years ago and now rent. Close the purchase of a home before December 1st, 2009 and you can claim a tax credit of up to 10% of the purchase price to a maximum of $8,000.
3. Understand, if your adjusted gross income exceeds $150,000 married couples or $75,000 for single people, the credit maximum begins to phase down.
4. If you purchase your new home prior to October 1st, 2009, you are allowed to file an amended tax return for 2008 and receive your $8000 now.
5. RECAPTURE. Buyers have to own the home for at least three years in order to capitalize on the credit. If they sell the home before then, they will have to return the credit to the government. (Exceptions will be made in certain cases, such as death or divorce.)
6. This same program will not only benefit first time home buyers but will have a powerful effect on the general housing market since the buyers selling their homes to the 1st timers will purchase "move up" homes in the process. This will spur on the market to correct our current situation, faster.
Summary:
This federal tax incentive has been created to get 1st time home buyers into "housing" faster and will surely assist in a faster correction and recovery of the housing market. Furthermore, 100's of thousands of property owners will be saved from being victims of a continued down turn in the foreclosure market since properties will be purchased by 1st time home buyers and move up buyers.
For additional, more detailed information, follow the links below
First Time Home Buyers Tax Credit - FHA.pdf
http://www.federalhousingtaxcredit.com/2009/faq.php
