Tuesday, December 30, 2008

First time Home Buyer Credit - how it works

Berkshire Creek condominiums in Ann Arbor viewed from Whole Foods.
Tax credit of up to $7,500 available to "first time" home buyers - In addition to great prices, interest rates for 30 fixed loans below 5%, First time buyers can take a $7,500 tax deduction on their 2008 or 2009 taxes. First-time home buyers in 2008 can take an income-tax credit on their purchase, thanks to passage in Congress earlier this year of the first-time home buyer tax credit.

The home must be a principal residence and purchased between April 9, 2008 and July 1, 2009.The definition of first-time home buyer is generous. To get the credit, the home buyer cannot have owned a home in the previous three years.

The credit is equal to 10 percent of the purchase price, up to $7,500. Single taxpayers with modified adjusted gross income up to $75,000 and couples with MAGI up to $150,000 will qualify for full credit. Singles with MAGI up to $95,000 and couples with MAGI up to $170,000 will get a reduced amount. Those with higher incomes don’t qualify.

If the amount of tax a homebuyer owes is less than the amount of the credit, they get to keep the difference in the form of an IRS refund.

The homebuyer must begin to repay the credit in two years in increments of about $500 a year over a 15-year period for those who received the full credit

Homebuyers who sell their home before the credit is repaid must pay off the loan with any profits. If they sell the home at a loss, the loan is forgiven.

If your are int he market for Ann Arbor or Ypsilanti real esate this is another reason to take a close look at available homes for sale.

More detail on how the credit works is available from NAR on REALTOR.org.

Photo: Berkshire Creek Ann Arbor condominiums viewed from the Whole Foods Patio.
Photo copyright Piperpartners.com

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