Learn How $8000 First Time Home Buyer Tax Credit Can Be Yours

Wouldn't it be nice to save $8,000 on your home purchase or to have $8000 to make renovations after you move in? Thanks to the “American Recovery and Reinvestment Act of 2009”, signed into law by President Obama on February 17, you can.

Here's how it works:

1. You must be a first-time home buyer, meaning you haven't owned a principal residence (owner-occupied home) in the 3 years before your purchase.
   
2. First-time home buyers that buy or have bought between January 1, 2009 and December 1, 2009 are eligible.
   
3. All principal residences are eligible including single family homes, condos, townhouses and co-ops.
   
4. The full $8,000 credit is available to those making $75,000 or less or $150,000 for joint filers.
   
5. The credit is capped at 10% of the purchase price.
   
6. The credit reduces or eliminates the income tax liability for the year of the purchase. If your tax liability is less than $8,000 you will recieve a refund of the difference.
   
7. You must live in the home for a minimum of 3 years or the amount of your credit is recaptured when you sell.

You may have heard a lot of negative talk about the tax credit that was passed in the fall of 2008. The initial legislation was not really a tax credit, but was a low interest loan which had to be repaid. It wasn't much benefit to home buyers. The American Recovery and Reinvestment Act supercedes the the 2008 legislation and really does put money in home buyers pockets.

If you are a first-time home buyer and would like to talk about how $8,000 can be yours, give me a call for a private consultation, 252-439-4000. There's no obligation!

How does the tax credit work?

Every dollar of a tax credit reduces income taxes by a dollar. Credits are claimed on an individual’s income tax return. Thus, a qualified purchaser would figure out all the income items and exemptions and make all the calculations required to figure out his/her total tax due. Then, once the total tax owed has been computed, tax credits are applied to reduce the total tax bill. So, if before taking any credits on a tax return a person has total tax liability of $9500, an $8000 credit would wipe out all but $1500 of the tax due. ($9,500 - $8000 = $1500)