Karen List asked: Who is Eligible
*The $7,500 tax credit is available for first-time home buyers only.
*The law defines a first-time home buyer as a buyer who has not owned a home during the past three years.
*All U.S. citizens who file taxes are eligible to participate in the program.
Who is not Eligible
*First Time Buyers using a state or local housing agency tax-exempt bond mortgage to finance the property.
*Non-resident aliens
Types of Homes that Qualify for the Tax Credit
*All homes, whether single-family, townhomes or condominiums will qualify.
* However, there are several conditions: (a) The home must be used as a principal residence, and
(b) The buyer has not owned a home in the prior three years.
*The Tax Credit includes newly-constructed homes.
Income Limits
*Home buyers who file as single or head-of-household taxpayers can claim the full $7,500 credit if their adjusted gross income (AGI) is less than $75,000.
*For married couples filing a joint return, the income limit doubles to $150,000.
*Single or head-of-household taxpayers who earn between $75,000 and $95,000 are eligible to receive a partial first-time home buyer tax credit.
*Married couples filing jointly who earn between $150,000 and $170,000 are eligible to receive a partial first-time home buyer tax credit.
*The credit is not available for single taxpayers whose AGI is greater than $95,000 and married couples filing jointly with an AGI that exceeds $170,000.
Effective Dates for the Tax Credit
First-time home buyers would receive a $7,500 tax credit for the purchase of any home on or after April 9, 2008 and before July 1, 2009. To qualify, you must actually close on the sale of the home during this period.
Tax Credit is Refundable
*A refundable credit means that if you pay less than $7,500 in federal income taxes, then the government will write you a check for the difference. (a) For example, if you owe $5,000 in federal income taxes, you would pay nothing to the IRS and receive a $2,500 payment from the government. (b) If you are due to receive a $1,000 tax refund from the government, your refund would grow to $8,500 ($1,000 plus $7,500 from the home buyer tax credit).
*If you purchased the home in 2008, the tax credit is taken on your 2008 tax return.
*If you buy in 2009, you have the option of taking the credit on your 2008 or 2009 tax returns.
Payback Provisions
*The tax credit is an interest-free loan that must be repaid over 15 years.
*The minimum repayment amount must be 15 equal annual installments. For example, if the credit amount is $7,500, then the home buyer must repay a minimum of $500 each year for 15 years.
ALSO: On July 30, 2008, President Bush signed into law a new housing reform bill designed to help stimulate the recovery of the housing industry.NOW is the time to take advantage of existing home buying assistance programs before they expire later this year.
Two important changes are:
1. All government-sponsored zero down payment assistance programs are eliminated as of October 1, 2008.To be eligible for these programs, all home loans would need to be approved by September 30, 2008.
2. The minimum down payment for Federal Housing Administration (FHA) loans, the largest purchaser of mortgages in the United States, would increase from 3 percent to 3.5 percent after October 1, 2008.
Veronica
