Understanding the $8k Homebuyer Tax Credit
Recently Congress, in an effort to motivate homebuyers to put the economy back on track, has enacted legislation to provide a tax credit to buyers. The offer is valid for purchases made only during the 2009 calendar year, and for first-time homebuyers only, although the $8,000 credit is quite the reward. In addition, the new tax credit does not need to be repaid over time, much unlike its predecessors.
Qualifying for the tax credit requires homebuyers to meet certain criteria. According to the legislation, they must be a first-time homebuyer, which has been defined as someone who has not been the owner of a principal residence for at least three years prior to the purchase. In addition, qualifying for the tax credit is subject to income restrictions. Single applicants must have made no more than $75,000 for the previous tax year, and married applicants no more than $150,000.
The homebuyer will receive an actual amount based on the price of the home being purchased, equivalent to up to 10%. The homebuyer will be credited for any amount up to the limit of $8,000. So if the home costs more than $80,000, the buyer will receive only $8,000 in tax credit regardless of the purchase price.
Many properties are eligible for the credit, and according to the new tax law, any property that can be used as a primary residence is allowable. Examples include: single-family houses, condominiums, town-houses, manufactured or mobile homes, and houseboats.
Newly constructed homes are also eligible for the tax credit. If the newly constructed home is purchased from a home builder, the settlement date must be between January 1, 2009 and December 1, 2009 in order to be eligible for the credit. Buyers who construct a home on a property they previously owned, on the other hand, are still eligible for the credit if the date they occupied the home was on or after January 1, 2009 or was before December 1, 2009.
While the new law is different from it's predecessors in that the credit does not have to be repaid, it's important to realized that the buyer must utilize the property as their primary residence for a minimum of 3 years after the purchase. The credit would otherwise need to be repaid.
Qualifying for the tax credit requires homebuyers to meet certain criteria. According to the legislation, they must be a first-time homebuyer, which has been defined as someone who has not been the owner of a principal residence for at least three years prior to the purchase. In addition, qualifying for the tax credit is subject to income restrictions. Single applicants must have made no more than $75,000 for the previous tax year, and married applicants no more than $150,000.
The homebuyer will receive an actual amount based on the price of the home being purchased, equivalent to up to 10%. The homebuyer will be credited for any amount up to the limit of $8,000. So if the home costs more than $80,000, the buyer will receive only $8,000 in tax credit regardless of the purchase price.
Many properties are eligible for the credit, and according to the new tax law, any property that can be used as a primary residence is allowable. Examples include: single-family houses, condominiums, town-houses, manufactured or mobile homes, and houseboats.
Newly constructed homes are also eligible for the tax credit. If the newly constructed home is purchased from a home builder, the settlement date must be between January 1, 2009 and December 1, 2009 in order to be eligible for the credit. Buyers who construct a home on a property they previously owned, on the other hand, are still eligible for the credit if the date they occupied the home was on or after January 1, 2009 or was before December 1, 2009.
While the new law is different from it's predecessors in that the credit does not have to be repaid, it's important to realized that the buyer must utilize the property as their primary residence for a minimum of 3 years after the purchase. The credit would otherwise need to be repaid.