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Tax Credits for Homebuyers |
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Tax Credits for Homebuyers |
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If you purchase a home before July 1, 2010, the federal government may give you a tax credit up to $8,000 for first-time buyers and up to $6,500 for current owners who buy. First-Time Buyers • To qualify as a first-time homebuyer, the purchaser cannot have owned a home within the previous three-year period. However, ownership of a vacation home or rental home does not disqualify the buyer. So long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close. • The deduction is worth 10 percent of a home’s value up to $8,000, which means all homes sold for $80,000 or more could qualify for the maximum amount. • There is an income limit to qualify. A married couples’ modified adjusted gross income (MAGI) should be under $225,000 and single filers’ MAGI should be less than $125,000. • Partial tax credits may be available for married couples with MAGI incomes over $225,000 and single filers with incomes over $125,000. • If married couples file separately, they can both claim 5 percent of the home purchase ($4,000 each for a home over $80,000) on their tax returns. • It’s a tax credit, not a deduction. That means the entire amount goes back to the first-time homebuyer unlike deductions, such as mortgage interest, that are subtracted from gross income before tax is calculated. If qualified for $8,000, the buyers get $8,000, even if they would not owe that much in taxes otherwise. • The tax credit does not have to be paid back, providing the homebuyer keeps the property for at least 36 months and resides in the home. Current Owners Who Buy • So long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close. • The deduction is worth 10 percent of a home’s value up to $6,500, which means all homes sold for $65,000 or more could qualify for the maximum amount. • The replacement house must become your main home. There is no requirement that you sell your current home. You could rent it, turn it into a second home, or list it for sale later when prices may be higher. • The $6,500 credit permits a broad range of dwelling types for your purchase, including new or existing single-family homes, condominiums, manufactured homes, and boats that are your principal residence. • Partial tax credits may be available for married couples with MAGI incomes over $225,000 and single filers with incomes over $125,000. • If married couples file separately, they can both claim 5 percent of the home purchase ($3,250 each for a home over $65,000) on their tax returns. • It’s a tax credit, not a deduction. That means the entire amount goes back to the homebuyer. If qualified for $6,500, the buyers get $6,500, even if they would not owe that much in taxes. • The tax credit does not have to be paid back, providing the homebuyer keeps the property for at least 36 months and resides in the home. |
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Rod Rawlings Broker (941) 713-4446 or
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