If you are a First Time Home Buyer, the United States government wants to motivate you to purchase a home to help alleviate the current vacant home inventory. There are a few things to know about the tax credit but if you are eligible and in the market for a property, this is the time to strike. Some highlights of the conditions and benefits of this tax credit are as follows:
- You must fit the definition of a first time home buyer which is defined as someone who has never before owned a property or someone who has not owned a primary residence for at least 3 years prior to a purchase. For married tax payers this time period rule is applicable to both of you. Meaning if your spouse has owned property within the time period rule you are both out of luck.
- There are income requirements. There is a reduced tax credit if you are single and make more than $75k (MAGI) or are married and file a joint return and combined make over $150k (MAGI). If you are single and make 95K (MAGI) or married and file a joint return and combined make over $170k (MAGI) the tax credit is reduced to zero.
- The property must be purchased between January 1, 2009 and December 1, 2009
- The tax credit is equal to 10% of the purchase price of the property.
- Any home that is purchased to be as used a primary residence can be eligible for a tax credit.
- The tax credit is refundable meaning if your tax liability is less than 8k you get difference as a refund. For example if you owe $4k in taxes then with this credit that 4k is wiped out and the US government will write you a check for $4k.