Safiur Rahman asked: Owning one’s own home is a dream of every individual. But as fate would have it, the current economic crisis with rampant job cuts in the US have made this dream a distant reality for many. The introduction of President Obama’s home stimulus package has, however, made this goal significantly more achievable for first time home buyers.
The first time home buyer stimulus package offers individuals a tax credit of 10% on the purchase price of a home (with a maximum amount of $8000) for homes purchased between January 1st, 2009 and April 30th, 2010. For those of you already familiar with this program, recent legislative changes have extended the previous purchase deadline of December 1st, 2009. Sales occurring by June 30, 2010 are also covered provided a binding contract is entered into by April 10, 2010.
A key point to mention here is that this credit is a grant which does not need to be paid back (unless the home is sold within the first three years). The entire credit amount is deducted from the total taxes owed to the government. Therefore, an individual qualifying for this credit who owes the government $8,000 in taxes would then owe nothing.
There are certain criteria that have to be met to qualify for this tax credit. First and foremost, you must meet the definition of a first time home buyer. For the purposes of the stimulus package, you are a first home buyer if you have not bought a home as a primary residence in the three years prior to your purchase. This applies to both you and your spouse if you are married. Therefore, if you have not purchased a home as a primary residence in the last three years but your spouse has, then you do not qualify. A primary residence does not include vacation homes; therefore if you own such a property you may still qualify for the credit. There are also no restrictions on the specific type of home (e.g. townhouses, condominiums, mobile homes, houseboats, etc) that can qualify as long as it is your primary residence.
You must also be within certain income limits (i.e. not earn above a certain amount) to qualify for this tax credit. For home purchases after November 6th, 2009, the income limit is $125,000 per year for single tax payers and $225,000 for couples filing jointly. These limits have also been amended recently from the previous limits of $75,000 for single tax payers and $150,000 for couples filing jointly.
I hope you found this overview of the first time home buyer stimulus package to be useful. There are many nuances surrounding the home stimulus legislation and it is always challenging to keep up with all the changes going on. Just make sure you do all the necessary research, stay up to date on the latest developments, claim your credit on your next tax return, and enjoy your new home!
Suzanne
