Everything you need to know about the $8,000 First-Time Homebuyer Tax Credit
IT EXPIRES NOV. 30, 2009!!!
The American Recovery and Reinvestment Act of 2009 expanded the first-time homebuyer credit by increasing the credit amount to $8,000 for purchases made in 2009 prior to December 1st.
At a glance:
- Applies to purchases that CLOSE after 4/8/2008 and by 11/30/2009
- Applies only to homes used as a taxpayer’s principal residence
- Reduces a taxpayer’s tax bill or increases his/her refund, dollar for dollar
- Is fully refundable, meaning that the credit will be paid out to eligible taxpayer’s, even if they own no tax or the credit is more than the tax owed
- Certain restrictions and eligibility requirements apply
First-time homebuyers represent a significant portion of existing single-family home sales. The expansion in the first-time homebuyer credit will make it easier for first-time homebuyers to enter the housing market this year.
For purposes of the credit, you are considered to be a first-time homebuyer if you, and your spouse if you are married, did not own any other main home during the three-year period ending on the date of purchase.
The previous tax credit had a limit of $7,500 and had to be repaid. The new tax credit has a limit of $8,000 and does not… free money!
You do not have to repay the credit, provided the home remains your primary home for 36 months after the purchase date.
Georgia Department of Revenue
Informational Bulletin CRED-2009-05-19
Eligible Single-Family Residence Tax Credit
First-Time Homebuyer $8,000 Tax Credit Frequently Asked Questions
Q: When must I pay back the credit for the home I purchased in 2009?
A: Generally, there is no requirement to pay back the credit for a principal residence purchased in 2009. Obligation to repay the credit arises only if the home ceases to be your principal residence within 36 months from the date of purchase. The full amount of the credit received becomes due on the return for the year the home ceased being your principal residence.
Q: If I claim the first-time homebuyer credit for a purchase in 2009 and stop using the property as my principal residence before the 36 month period expires after I purchase, how is the credit repaid and how long do I have to repay it?
A: If, within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full amount of the credit is due at the time the income tax for the year the home ceased to be your residence is due. The full amount of the credit is reflected as additional tax on that year’s tax return.
Q: I plan to build a home and occupy it in 2009. Can I claim the first-time homebuyer credit now and use the funds toward the down payment or other ongoing construction costs?
A: No. To qualify for the first time homebuyer credit, the residence must be purchased. By statute, a residence which is constructed by the taxpayer is treated as purchased on the date the taxpayer first occupies the residence.
Q: I bought my home in 2009 (early) and filed my 2008 tax return claiming the $7,500 first-time homebuyer credit that has to be repaid. Now the expanded law provides for an $8,000 credit that does not have to be repaid. What do I need to do to get the $8,000 credit that does not have to be paid back?
A: You can file an amended return.
Q: I am in the process of buying a home. I expect to close the deal before December 1, 2009. Can I claim the first-time homebuyer credit now? That would allow me to use the fund for a down payment.
A: No. You may not claim the credit in anticipation of a purchase that has yet to happen. Until you have finalized the purchase of your home, which for most purchases occurs at the time of the closing, you do not qualify for the credit.
Bank of America does NOT have a minimum credit score for FHA loans!!!
Currently we are the ONLY LENDER I know of that do NOT have a minimum credit score. Other lenders are adhering to a 620 minimum score, which will limit your business. If you have clients that have been turned down for loans at other companies please urge them to call your alliance partners at Bank of America!! Last month alone we saved several deals that were denied at other lenders!!!
Kim Nehiley; (C) 404-667-3920; Kim.Nehiley@BankofAmerica.com
Scott Meldrum; (C) 404-992-8422; Scott.Meldrum@BankofAmerica.com
Related Posts From Keller Williams Atlanta:
Atlanta Real Estate Legal Tip: Termite Letters – Still a Good Idea
Keller Williams Realty Atlanta: Atlanta Metro Market Overview – October 2009
This Month in Real Estate Video Report For U.S. Market – September 2009
[...] First-Time Homebuyer $8,000 Tax Credit Frequently Asked Questions [...]