Tax Credit To Help First-Time Buyers

Another feature of the Housing and Economic Recovery Act of 2008 offers qualified first-time buyers a tax credit of up to $7,500 (or up to $3,750 for married filing separately) if they purchase a principal residence on or after April 9, 2008 but before July 1, 2009. (The purchase date is the day of closing or settlement.)The credit -- which is more like an interest-free loan -- must be repaid to the government over a 15-year period in equal installments, or repaid in full when the home is sold or ceases to be used as a principal residence and there is enough gain from the sale to repay the credit. If there is no gain, however, the remainder is forgiven. The first payment is due two years after the credit is claimed.The amount of the credit is limited to 10% of the purchase price of the home, but no more than $7,500 or $3,750, depending on filing status. Those who qualify can claim the credit on their federal income-tax return.Qualified first-time buyers cannot have owned a principal residence during the three years prior to the home purchase. For married taxpayers, the rule applies to both spouses — if either has owned a principal home within the prior three-year period, neither spouse can claim the credit. However, the new law does not disqualify those who have owned a vacation home or rental property within the three-year period. Also, in a divorce, although recapture is not triggered immediately, the spouse who gets the home becomes liable for paying back the credit eventually upon sale.The full credit is available to married joint-filers with Modified Adjusted Gross Income (MAGI) up to $150,000, and to single filers with MAGI up to $75,000. The credit is phased out for buyers with MAGIs above those levels and is totally unavailable for MAGIs at or above $170,000 (joint filers) or $95,000 (single filers).Contact your tax professional to learn more about the fine points of qualifying for and taking advantage of this limited-time opportunity.

Buy Your First Home Before July 1, 2009 And Save $7,500 On Your Income Taxes!

Lonnie Snyder
REALTOR®
Keller Williams Realty Southeast Sound
Phone: 206-406-2710
E-Mail : snyder@kw.com
Website: http://www.callsnyder.com/
Blogsite: http://renton-real-estate.blogspot.com/
Lonnie Snyder is a full time real estate agent and REALTOR® with Keller Williams Realty specializing in Residential Real Estate for buyers and sellers in Washington’s Kent, Renton, Newcastle and South Bellevue.