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$8,000
TAX CREDIT FOR FIRST-TIME HOMEBUYERS
First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people
who have not owned a home within the last three years) may be eligible
for the tax credit. The credit for FTHBs is 10% of the purchase price of
the home, with a maximum available credit of $8,000.
Single taxpayers and married couples filing a joint return may qualify
for the full tax credit amount.
Current Owners: The tax credit program now gives those who already own a
residence some additional reasons to move to a new home. This incentive
comes in the form of a tax credit of up to $6,500 for qualified
purchasers who have owned and occupied a primary residence for a period
of five consecutive years during the last eight years.
Single taxpayers and married couples filing a joint return may qualify
for the full tax credit amount.
What are the New Deadlines?
In order to qualify for the credit, all contracts need to be in effect
no later than April 30, 2010 and close no later than June 30, 2010.
Tax Credit Versus Tax Deduction
It’s important to remember that the tax credit is just that… a tax
credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax
reduction, rather than a reduction in a tax liability that would only
save you $1,000 to $1,500 when all was said and done. So, if a
first-time homebuyer were to owe $8,000 in income taxes and would
qualify for a tax credit of $8,000, she would owe nothing.
Better still, the tax credit is refundable, which means the homebuyer
can receive a check for the credit if he or she has little income tax
liability. For example, if a first-time homebuyer is eligible for a tax
credit of $8,000 but is liable for $4,000 in income tax, she can still
receive a check for the remaining $4,000!
Higher Income Caps
The amount of income someone can earn and qualify for the full amount of
the credit has been increased.
Single tax filers who earn up to $125,000 are eligible for the total
credit amount. Those who earn more than this cap can receive a partial
credit. However, single filers who earn $145,000 and above are
ineligible
Joint filers who earn up to $225,000 are eligible for the total credit
amount. Those who earn more than this cap can receive a partial credit.
However, joint filers who earn $245,000 and above are ineligible.
Maximum Purchase Price
Qualifying buyers may purchase a property with a maximum sale price of
$800,000.
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