After the federal Stimulus Bill passed on February 17, 2009, there are a number of components aimed at revitalizing the real estate market. There is a new tax credit available to any homebuyer who has not owned a principal residence in the past 3 years. The qualifications are different from the tax credit of 2008, and does not necessarily need to be repaid. Below you will find a simplified list of eligibility requirements.
Who Qualifies:
Any purchaser and purchaser’s spouse who has not owned a principal residence in the past three years.
Eligible Properties:
Any single family residence (including condos, co-ops, or townhouses) that will be used as your primary residence.
Income Limit:
Full amount of credit available for persons with adjusted gross income of no more than $75,000 on an individual tax return OR $150,000 on a joint tax return. Phases out above those caps at $95,000 and $170,000 respectively.
Amount of Credit: Lesser of 10% of cost of home OR $8,000.00
Qualification Dates: Buyers must close on their home between January 1, 2009 and November 30, 2009 to qualify.
Repayment: Unlike the 2008 tax credit, this credit will not need to be repaid to the government as long as the purchaser owns the property for a minimum of three years. If the home is sold within three years of purchase, the entire amount of the credit must be repaid from the sale proceeds.
Revenue Bond
Financing: Purchasers who utilize revenue bond financing can qualify for this credit.
Retroactive: Because the bill was passed on February 17, 2009, this bill is retroactive for sales closed since January 1, 2009.
The
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This is great, the $8,000 tax credit is a really good idea and even better given the fact that you don’t have to pay it back if you own it for more than 3 years. I am considering more and more the idea of buying a place within the near future. Thanks for sharing this information…it’s very helpful and easy to understand.
The fact that if you bought in 2009 this does not have to be re-paid, is really disappointing for those who bought in 2008 and are eligible for the tax credit. We still have to repay.
Mike,
It is unfortunate for those who purchased a home in 2008. The National Association of Realtors lobbied aggressively to get this tax credit approved for 2009. This is too late for some buyers. If it is any consolation, depending on what month you bought a home, you may have gotten a lower interest rate than those homebuyers in the market now.
Randy,
You are smart to consider a purchase this year to take advantage of this tax credit. Hopefully there are other buyers out there who can see past all of the woes in the media and realize the opportunities that are out there right now. We are seeing the lowest interest rates in history, coupled with a tax credit that does not have to be repaid, in addition to high inventory and low prices.
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I signed a contract for deed 1 1/2 yrs ago. Our name is not on the title, do I still qualify for the credit?
Cindy, the credit is only for homes that close in 2009 before December 1.
If I buy my first home contract for deed do I still qualify for the $8000?
The $8,000 tax credit applies to any homebuyer who is purchasing a home for their primary residence as long as they have not owned property in the past three years.
So a contact for deed buyer will qualify? Also would a tax lein smaller than the 8,000 amount be satified with the tax credit?
BJS, the title is the important part of the provision not the deed. I would suggest that you contact a real estaet lawyer, or an accountant to give you precise answer you are looking for.
I have consulted an attorney regarding the issue of contract for deed and if it qualifies as a real “purchase”. The answer is yes.
If you purchase a home on land contract, feel free to file the amended return and get your money!
The contract for deed is a means of FINANCING a home. As long as you meet the other criteria (“first time buyer” as defined by the IRS, along with income requirements), then it’s fine.
I am a long time investor who closes about a deal per week. I have been to the closing table more times than the average realtor will.
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There is obviously a lot to know about this credit score thing. I think you made some good points also.
Whould I still be able to get the tax credit even though I had a bankruptcy a year 1/2 ago. I am getting ready to do a contract for deed on the property that I am renting.
How is the credit given to me? If I only make $10,000 a year and buy a $40,000 house on contract for deed how do I get the $4,000? Is it like a $4,000 stimulus check? How long do I have to wait for the money?
Marshall there are two ways that you can get the credit. First you can use the credit towards your down payment, or you can use it as a standard tax credit on your 2009 tax returns. So in short – you can access the money immediately by applying it to your down payment, saving you from paying $4,000 out of pocket, or you can wait for your regular tax refund check next year. You are also correct that the refund amount is 10% of the home value up to $8,000 in total refunds. Marshall if you have a property picked in out Cincinnati please call me and we can write up an offer! 513-518-1140