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Why Buy a Home? It's all about the Benjamins!Homeownership has proven itself to be a wise long-term investment. Several reasons for being a wise investment include: -Paying rent pays your landlord's mortgage. Every dollar you spend toward principle on your mortgage, that builds your equity and your wealth. - Income taxes favor those who own a home. Additional deductions such as mortgage interest, property taxes, and some closing costs reduce the amount of money you pay in income taxes. - When you finally do go to sell, your equity (original mortgage amount, minus principal paid) belongs to you, and is often not subject to income taxes. - And, for purchases made between January 1, 2009 and November 30, 2009, you may be eligible for an up to $8,000 First-Time Homebuyer Tax Credit. $8,000 First-Time Homebuyer Tax Credit
To entice first-time homebuyers into the marketplace, an updated First-Time Home Buyer Tax Credit has been enacted, for eligible home purchases between January 1, 2009 and November 30, 2009, which requires no repayment as long as the home is not sold within 3 years from purchase. Key aspects of this tax credit: FIRST-TIME HOMEBUYER TAX CREDIT As Modified in the American Recovery and Reinvestment Act
FEATURE
EFFECTIVE FOR PURCHASES ON OR AFTER JANUARY 1, 2009 AND BEFORE DECEMBER 1, 2009
Amount of Credit
Lesser of 10 percent of cost of home or a maximum of $8,000.
Eligible Property
Any single-family residence (including condos) that will be used as a principal residence
Refundable
Yes. Reduces (or can eliminate) income tax liability for the year of purchase. Any unused amount of tax credit refunded to purchaser. Refunded to purchaser by check or direct deposit
Income Limit
Yes. Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out gradually above those caps to $95,000 and $170,000.
First-time Homebuyer Only
Yes. Purchaser (and purchaser's spouse) may not have owned a principal residence in 3 years previous to purchase date.
Revenue Bond Financing
Purchasers who utilize revenue bond financing can use credit.
Repayment
No tax credit repayment for purchases on or after January 1, 2009 and before December 1, 2009
Recapture
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
November 30, 2009 is the final date you must close by to claim the tax credit
Effective Date
All revisions are effective as of January 1, 2009
Down Payment Options
One or more options may be available depending on a borrower's situation. Learn more.
IRS Form
The IRS requires Form 5405 (First Time Homebuyer Credit) to be filed with your Federal Income Tax 1040 form to claim the First-Time Home Buyer Tax Credit. The same form is for those taking the 2008 or 2009 version, and can be used toward 2008 or 2009 taxes. If you have already filed your 2008 taxes, use IRS Form 1040X along with Form 5405 to Amend your 2008 tax return. For amendment questions and how to use Form 1040X, see Instructions for Form 1040X. If you already received the $7,500 First Time Home Buyer Tax Credit for a home purchase in 2009, use these same forms to receive the additional $500.
For more information, visit our $8,000 First-Time HomeBuyer Tax Credit details. Ready to begin? First step is to qualify for a mortgage, and then begin your homesearch! We can help you with the process. Contact us at (800) 521-2152 , or contact us online. CAVEAT: THIS INFORMATION IS BELIEVED TO BE ACCURATE, BASED ON INFORMATION AVAILABLE AS OF FEBRUARY 16, 2009. AS WITH ANY TAX LAW CHANGE, CHECK WITH A TAX ADVISOR IF THERE ARE QUESTIONS ABOUT USING THIS PROVISION. |
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