$8,000 first-time home buyer tax credit information.

There are probably a few questions out there with regard to the new first time home buyers tax credit.  The Wisconsin Realtors Association has a Legal Hotline and this particular question was answered and send out as an email to the agents in the association.  I hope it helps clarify things.

1.) Mortgage Banking/Finance – General Finance
QUESTION:
Re: New stimulus plan. If agent is working with buyers who want to close on a home in March, do they get the $8,000 credit when they file their taxes for 2008 or do they not get it until they file their 2009 taxes?

ANSWER:

At first blush it would seem that the credit would appear on their 2009 tax returns, since the home purchase will have occurred in 2009. However, it may be possible to take the credit on the 2008 tax returns according to some commentators (see the NAR material linked below). The buyers should definitely consult with their tax advisor.

Here are six things to know about the newly-enacted $8,000 first-time homebuyer tax credit:

1. Eight grand, new buyers: The tax credit included in the economic stimulus legislation is much narrower than the $15,000 proposal. This credit is equivalent to 10 percent of the purchase price of the home–although it’s capped at $8,000–and applies only to first-time home buyers and principal residences. But unlike an earlier $7,500 home buyer tax credit, this one does not have to be repaid.

2. First time buyers defined: For the purpose of this legislation, a “first-time home buyer” is someone who hasn’t owned a principal residence for three years before buying a house. (The date of purchase is considered the day that the title is transferred.) That means if you’ve owned a vacation home–but not a principal residence–within the past three years, you would still qualify for the credit.

3. 2009 buyers only: Only those who purchase a home on or after January 1 and before December 1, 2009 are eligible for the credit. Anyone who bought a home last year won’t be able to take advantage of it.

4. Income limits: The tax credit is subject to income limitations. Single buyers need a modified adjusted gross income of $75,000 or less to qualify for the full credit, that’s $150,000 for married couples. Those earning more than these thresholds may be eligible for reduced credits.

5. Refundable: Because the tax credit is “refundable,” qualified buyers can take advantage of it even if they don’t have much tax liability.

6. Recapture: Buyers have to own the home for at least three years in order to capitalize on the credit. If they sell the home before then, they will have to return the credit to the government. (Exceptions will be made in certain cases, such as death or divorce.)

READ MORE ABOUT IT:
See the NAR material regarding the $8,000 first-time homebuyer credit @ http://www.realtor.org/government_affairs/gapublic/american_recovery_reinvestment_act_home?lid=ronav0019.