The new Economic Stimulus Plan includes an $8000 Tax Credit for First Time Home Buyers OR those who have not owned a home for 3 years. Unlike the $7500 tax credit from last year, this credit does NOT have to be re-paid as long as you own the home as your primary residence for at least 3 years. You have to purchase a home between January 1, 2009 and November 30, 2009 to qualify.
The credit is refundable, meaning that you can get the refund even if your tax liability is less than $8000. It is actually based on 10% of the purchase price and capped at $8000 meaning that as long as you buy a home over $80,000, you qualify for the full $8000 credit.
The catch – there are income limits. $75,000 for individuals and $150,000 for married couples to get the full credit. If you earn more than that, you may still qualify for a partial credit.
If you sell the home within 3 years, you will have to return the credit to the government. (Exceptions will be made in certain cases, such as death or divorce.)
The idea behind this tax credit is to revive the housing market by encouraging first time home buyers to act now. If first-time home buyers jump into the market, then sellers of starter homes can move up to more expensive properties and those sellers can buy even more expensive homes and so on. Interest rates are still low as well, hovering around 4.875%, so the hope is that the combination of these two factors will help jump start the slow housing market in time for the usually busy spring selling season.
blog by elephant’s realtor – Liz Benson
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