$8k Tax Credit for Homebuyers

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.

Homebuyers must meet certain criteria in order to qualify for the credit. This includes being a first-time homebuyer, which, according to the legislation, is defined as an individual who for a period of three years prior to the purchase has not been the owner of a principal residence. Income restrictions also factor into receiving the credit, which will be available only to single taxpayers with an income of $75k or less and married taxpayers with a combined income of $150k or less.

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 also meet the criteria required. If purchased from a builder, the settlement date must occur within the 2009 calendar year. Buyers who are constructing a home on property they already own are still eligible for the credit as well, so long as they first occupied the home on or after January 1, 2009, and 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.

Find out about the real estate tax credit and look at Austin Lake Estates.

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