Clarifying the $8000 Tax Credit for First Time Home Buyers
I feel the need to try to clarify the new $8000 Tax Credit for First Time home buyers. As I was chatting with my Accountant today we started talking about the New and Exiting incentive to get first time buyers into the real estate market.
As we were discussing the benefits we had a few questions that we could not answer:
Why did the politicians pick a date of December 1, 2009 vs. the end of the year? Does the December 1, 2009 date mean Opening of Escrow? Or does it mean the sale must close by December 1, 2009?
Now I must admit we were both confused and did not have a clear answer. He is an Accountant and I am Realtor. If we are not clear, then what about the first time home buyer? I promised him I will get to the bottom of it relatively quickly, before too many people will be approaching us and we do not want to (a) not have the answer or (b) give the wrong answer. The good news is we will have the answer soon.
Now to the points that we do have answers to I would like to summarize it here.
- Refund: The Refund is equal to 10% of the Purchase Price up to a maximum of $8000.This credit is refundable, in other words. If you file your taxes, you will see a refund of the full $8,000 even if your total tax bill – the amount of withholding that you paid during the year- was less than that amount.
- Purchase Date: To qualify for the credit, the purchase must be made between January 1, 2009 and December 1, 2009. Buyers may not have owned a home for the past three years to qualify as “first time” buyer. They must also live in the house as their primary residence for at least three years, or they will be obligated to re-pay the tax credit.
- Applying for the Credit: Applying for the credit will be relatively easy. All you have to do is claim it on your tax return. No other forms have to be filed. Taxpayers who have already completed their returns can file an amended return for 2008 to claim the credit. This does not have to be repaid to the Federal Government.
- Income: To qualify, buyers must make less than $75,000 for singles or $150,000 for couples. (Higher-income buyers may receive a partial credit.)
If you have any questions reference this subject feel free to contact me directly. I Hope this helped clarify a bit the confusion that exists out there about this $8000 provision.
If you are a consumer who is considering buying or selling a home, investment real estate, vacation homes, or beach properties in Southern California, Los Angeles, Century City, Westwood, Beverly Hills, Culver City, Marina Del Rey, Venice or Malibu. Feel Free to give me a call at 310.486.1002 (USA) or email me at EndreBarath@TheMLS.Com or visit one of my websites at http://www.endrebarath.com