New Stimulus Plan
The Stimulus Plan was signed into law by President Obama, containing a new tax credit for first-time homebuyers. Essentially, first-time homebuyers within certain income limits who purchase a home in 2009 before December 1, 2009 will receive a tax credit of up to $8,000. The program is similar to the $7,500 tax credit which applied to home purchases made in 2008 after April 9.
Who qualifes for the credit programs?
While the Stimulus Plan was still being debated, the Senate version originally included a $15,000 tax credit for all homebuyers. To lower the cost of the Stimulus Plan, the final version of the Plan contained this smaller tax credit, and this tax credit is applicable only to first-time homebuyers.
To qualify for these programs:
- The purchaser (and the purchaser’s spouse) may not have owned a home in the three years prior to the purchase date of the home.
- Single-family homes qualify for the program.
- The home must be the primary residence. Both tax credits are subject to the same adjusted gross income limitations (full credit for AGI less than $75,000 single/$150,000 joint, phased out for AGI up to $95,000 single/ $170,000 joint).
What are the credit amounts?
The amount for either credit is the lesser of 10% of the home purchase price or $7,500 or $8,000, as applicable.
Do I have to repay the credits?
While a purchaser still owns the home, the $7,500 credit must be repaid in equal payments over a period of 15 years, starting with the 2010 tax filing. The $8,000 credit will not need to be repaid. Again, the $7,500 credit must be repaid, while the $8,000 credit does not!
Upon sale of the home, any portion of the $7,500 credit not yet repaid is due in full. No portion of the $8,000 credit is due upon sale of the home, if the home is owned for more than three years. If the home is sold within the first three years, the full amount of the credit is due upon sale.
The $7,500 credit was not available to any purchaser utilizing state/local revenue bond money to help finance the home purchase. There is no such restriction on the $8,000 credit.
Will I need to claim the credits on my taxes?
Under both the $7,500 and the $8,000 programs, the credit will be claimed on the purchaser’s income taxes. Any amount in excess of taxes owed will be refunded to the purchaser.
Additional information about the tax credit can be found on the websites of the National Association of Realtors.
Leaman Team wants to make sure your questions are answered. Please call Leaman Team today to discuss your home financing: (512) 710-1400 or email LeamanTeam@LoanPeople.com.