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Am I a First Time Buyer ???
Can I benefit from the $8000 Tax Credit ???
Many buyers believe that to be a “First Time Buyer” and benefit from this tax credit it must really be the “first” home that they buy!
This is a very common misinterpretation!
In fact, I would like to emphasize a little bit on this in case you or someone you know, or a relative or maybe even one of your children who would like to buy now in this downturn market but think he/she does not qualify…
According to IRS, The American Recovery Reinvestment Act may give them the break they are looking for if they are First Time Buyers! That means that they have not owned a principal residence at any time during three (3) years prior to the date of purchase, neither their spouse if they are married.
The credit amount starts phasing out if they make more than $75,000 or $150,000 if they are filing a joint return.
- The Act specifies that the property must be under contract prior to April 30, 2010 and closes before June 30, 20010 and they must be physically living in the house by July 1st.
- The credit applies only to homes used as a taxpayer’s primary residence.
- It reduces a taxpayer’s tax bill or increases his or her refund, dollar for dollar.
- It is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax they owed. One of my buyers who closed in March, filed in April, was able to tile his kitchen floor with the credit that he got within 1 week!!!
- The property must be located in the United States (not in US territories).
- A house with attached or detached “ohana” would qualify even if the owner rents the ohana.
A few drawbacks…
- If the home ceases to be the principal residence within the 36-month period beginning on the purchase date, the credit will have to be repaid in full.
- The property cannot be bought from a close relative.
Buyers who have good credit may qualify for FHA loans with only a 3.5% down payment – as long as everything in the property is conforming to the County’s building use & codes. - and that they use it as their primary residence.
Home Sweet Home never sounded so good!
Q. How do I apply for the credit?
A. The credit is claimed on new IRS Form 5405, First-Time Homebuyer Credit, and filed with your 2008 or 2009 federal income tax return
Visit the IRS website at http://www.irs.gov/newsroom/article/0,,id=204671,00.html for more info
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