The stimulus debacle awaiting the President's signature expands the "first-time homebuyer" tax credit. A call from a Des Moines Register reporter (for this story) got me to digging into it a bit more. It's a great deal for those who qualify, though there's no way it cures what ails the housing market. Some key points:
- The credit is refundable. That means if you qualify, and the credit you qualify is more than your actual tax for the year, you get the whole credit anyway. If you qualify for an $8,000 credit, your federal income tax before the credit is $2,000, and you had $2,100 tax withheld on your W-2, you will get a refund check $8,100 - all of your withholding, because your net tax is zero, and the $6,000 amount that the credit exceeds tax.
- The credit has to be repaid for over a 15-year period for houses purchased from April 9, 2008 through the end of 2008 -- making it more of an interest-free loan than a tax credit. But for houses purchased in 2009, the credit only has to be repaid if the house is sold, or not used as a principal residence, within 36 months of purchase.
- If you purchase a house in 2009, you can elect to claim the credit on your 2008 1040. If you purchase the house after you file your 2008 1040, you can amend your 2008 return and get your refund that much sooner.
The definition of "first-time homebuyer" is somebody who hasn't owned a house in three years - sort of a renewable virginity.
The credit phases out for adjusted gross incomes over a $20,000 range starting at $75,000 for singles and for $150,000 for joint fliers. The $8,000 credit limit - the lesser of $8,000 or 10% of the house price - applies going back to the original April 2008 effective date.
Link: IRS web site on first-time homebuyer credit (not yet updated for new law).
Related: $15,000 homebuyer credit not in conference bill
Comments (0)
Comments on this Entry:
Link to original post