$8,000 First Time Home Buyer Tax Credit
The bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. The credit DOES NOT require repayment.
Here are some Frequently Asked Questions:
What if I'm a homeowner on the brink of foreclosure?
Homeowners who are behind on their mortgage payments or are struggling to keep current may qualify for a mortgage modification. To qualify the house must be your primary residence, your mortgage payment must be greater than 31 percent of your monthly gross income & your loan must not exceed current Fannie Mae and Freddie Mac loan limits. Owners of multi-unit properties are eligible as long as they live in one unit as a primary residence. Only first mortgages are eligible for a modification.
What if I'm not near foreclosure, do I get any assistance?
Borrowers who are current on the mortgages but can't refinance into lower interest-rate loans because their homes have fallen in value are eligible to refinance into a 30 or 15 year fix rate loan under the plan. However the loan needs to be held by Fannie Mae or Freddie Mac. To qualify homeowners can't owe more then 105% of their home's current value on their first mortgage.
Any Breaks for first-time homebuyers?
Under the stimulus plan first time homebuyers who purchase a home between Jan 1 and Dec 1 will be eligible for a tax credit of 10% of the value of the home up to $8,000. Homeowners would have to repay the credit if they sold their home within three years.
What is considered a first-time buyer?
First time buyers are defined as those who haven't owned a house for at least 3 years.
Any other breaks for current homeowners?
Homeowners also can get a tax credit of up to $1,500 by making their homes more energy-efficiency this year or next. Some projects that qualify are installing energy-efficiency windows, door, furnaces or air conditioners.
How soon can I expect to take advantage of these benefits or aid?
The refinancing and loan modification programs start March 4th. The first time Homebuyer tax credit is in effect from the first of the year through the end of November. The "green" home tax credit applies to energy-efficient improvements made through 2010.
What should I do until March 4th?
If you are interested in refinancing or applying for a loan modification, collect all the necessary documents to give to your lender. This includes most recent pay stubs, recent tax return, information about your second mortgage, payment info on credit cards, student loans, car loans.
What if I'm facing foreclosure now and can't wait until March 4th?
Contact your mortgage company. Many lenders said they will postpone foreclosure sales on home loans that could qualify.
First-Time Homebuyer Tax Credit
As modified in the American Recovery and Reinvestment Act
February 2009
|
Feature |
Credit as created July 2008 applies to all qualified purchases on or after April 9, 2008 |
Revised Credit Effective for Purchases on or after Jan 1, 2009 & before Dec 1, 2009 |
|
Amount of Credit |
Lesser of 10 % of cost of home or $7500 |
Maximum credit amount increased to $8000 |
|
Eligible Property |
Any single family residence (including condos, co-ops, townhouses) that will be used as a principal residence |
No change All principal residences eligible |
|
Refundable |
Yes. Reduces (or can eliminate) income tax liability for the year of purchase. Any unused amount of tax credit refunded to purchaser. |
No change Purchasers will continue to receive refund or unused amount when tax return if filed. |
|
Income Limit |
Yes. Full amount of credit available for individuals with adjusted gross income of no more then $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000) |
No Change Same limits continue to apply |
|
First-Time Homebuyer Only |
Yes, purchases (and purchaser's spouse)may not have owned a principal residence in 3 years previous to purchase. |
No Change Still available for first-time purchasers only. Three-year rule continues to apply. |
|
Revenue Bond Financing |
No credit allowed if home financed with state/local bond funding. |
Purchasers who utilize revenue bond financing can use credit. |
|
Repayment |
Yes. Portion (6.67% of credit or $500) to be repaid each year for 15 years, starting with 2010 tax filing. |
No repayment for purchases on or after January 1, 2009 and before December 1, 2009 |
|
Recapture |
If home sold before 15-year repayment periods ends, then outstanding balance of repayment amount recaptured on sale. |
If home is sold within three years of purchase, entire amount of credit is recaptured on sale. Applies only to homes purchased in 2009. |
|
Termination |
July 1, 2009 (but note program changes for 2009) |
December 1, 2009 |
|
Effective Date |
Purchases on or after April 9, 2008 and before January 1, 2009. Repayment to begin for 2010 tax year. |
All revisions are effective as of January 1, 2009 |
For more information on the First-Time Homebuyers Tax Credit, click here