This new tax credit is a little complicated so I am going to attempt to make it easy to understand. When you study this and you find that this incentive is for you, start looking for your perfect home.
- The deduction is worth 10 percent of a home’s value up to $8000. which means all homes worth more than $80,000 could qualify for the maximum amount.
- There is an income limit to qualify. A married couples’ modified adjusted gross income (MAGI) should be under $150,000 and single filers’ MAGI should be less than $75,000.
- It is a tax credit, not a deduction. That means the entire amount goes back to the first time home buyer unlike deductions, such as mortgage interest, that are substracted from gross income before tax is calculated. If qualified for $8000, the buyer gets $8000 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.
- 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.
- The tax credit applies to homes purchased between January 1, 2009, and December 31, 2009
Obviously there are more details to this new law. Please contact me, if you have questions. But, basically, it is a grand incentive to buy, this year, while home prices are very low and there is a bonus in buying.