What are the details of the $8,000 Tax credit

More than just real estate.

Dear friends,

Below are some Q and A regarding the recently announced tax credit.

Hopefully this will answer most of your questions, if not feel free to contact me.

Q&A on $8,000 First-Time Home Buyer Tax Credit Q: Who is eligible to use the tax credit? A: The $8,000 tax credit is available for first-time home buyers only. The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. All U.S. citizens who file taxes are eligible to participate in the program.
Q: Are there any payback provisions? A: The tax credit is a true credit. It does not have to be repaid. The only repayment requirement is if the home owner sold the home within three years after the purchase.
Q: Are there income limits to qualify for the credit? A: Home buyers who file as single or head-of-household taxpayers can claim the full $8,000 credit if their modified adjusted gross income (MAGI) is less than $75,000. For married couples filing a joint return, the income limit doubles to $150,000. Single or head-of-household taxpayers who earn between $75,000 and $95,000 are eligible to receive a partial first-time home buyer tax credit. Married couples who earn between $150,000 and $170,000 are eligible to receive a partial first-time home buyer tax credit. The credit is not available for single taxpayers whose MAGI is greater than $95,000 and married couples with a MAGI that exceeds $170,000.
Q: What are the effective dates for the tax credit? A: First-time home buyers would receive an $8,000 tax credit for the purchase of any home on or after January 1, 2009 and before December 1, 2009. To qualify, you must actually close on the sale of the home during this period.
Q: Is the tax credit refundable? A: Yes. A refundable credit means that if you pay less than $8,000 in federal income taxes, then the government will write you a check for the difference. For example, if you owe $5,000 in federal income taxes, you would pay nothing to the IRS and receive a $3,000 payment from the government. If you are due to receive a $1,000 tax refund from the government, your refund would grow to $9,000 ($1,000 plus $8,000 from the home buyer tax credit).Q: What years can buyers apply the tax credit to their tax returns? A: Buyers can take the tax credit on their 2008 or 2009 income tax return.
Q: What types of homes qualify for the tax credit? A: All homes, whether single-family, townhomes or condominium apartments will qualify, provided that the home will be used as a principal residence and the buyer has not owned a principal residence in the prior three years. This also includes newly-constructed homes.
Q: Where can I find more details on the tax credit? A: NAHB has a consumer Web site that provides comprehensive information on the tax credit. The Web site is http://www.federalhousingtaxcredit.com/ .

Courtesy of John Adams 02/26/09. http://www.money99.com/