$8,000 First-time Homebuyer Tax
Credit
In an effort to improve the national economy, part of the
$787 billion stimulus package of 2009 was designed to help the real estate
market recover by giving an $8,000 tax credit to first-time buyers.
The first-time homebuyer tax credit has been extended to
reach more homebuyers and it includes buyers looking for Fairfax County VA homes
for sale. If you qualify for the tax credit you’ll still be eligible to receive
up to 10% of the purchase price of a home, with a maximum tax credit of $8,000.
To qualify for the tax credit:
- You must not have owned a home within the past three
years
- Purchase a primary residence
- Purchase price must be $800,000 or less
- Enter into a sales contract by April 30, 2010
- Close by June 30, 2010
$6,500 Tax Credit for Existing Home Owners
The tax credit program has been expanded to those home
owners who already own and occupy a primary residence and would like to purchase
a new home. There will be a tax credit up to $6,500 for those homeowners who
qualify by meeting these guidelines below:
- You must have owned a primary residence five consecutive
years out of the last eight years
- Purchase a primary residence
- Purchase price must be $800,000 or less
- Enter into a sales contract by April 30, 2010
- Close by June 30, 2010
Tax Credit Versus Tax Deduction
It’s important to remember whether you are talking about
the $8,000 first-time homebuyer or the $6,500 existing home owner tax credit,
the tax credit is just that… a tax credit. It is a dollar-for-dollar tax
reduction instead of a reduction in a tax liability that may only save you
$1,000 to $1,500.
For example, if a first-time homebuyer were to owe $8,000
in income taxes and qualifies for a tax credit of $8,000, he or she would owe
nothing. The same would apply to an existing home owner who owed $6,500 in
income taxes and qualifies for the tax credit of $6,500.
Better yet, the tax credit is refundable. This means
homebuyers who qualify for the tax credit can receive a check for the credit if
they have little income tax liability.
For example, if a first-time homebuyer is eligible for a tax credit of $8,000
but is liable for $4,000 in income tax, you can still receive a check for the
remaining $4,000. The same is true for existing home owners who are eligible for
the $6,500 tax credit. If they are liable for $4,000 in income tax, they can
receive a check for the remaining $2,500.
Higher Income Cap Qualifications
The amount of income someone can earn and still qualify
for the full amount of the tax credit has been increased. The purchase price of
the home is capped up to and including $800,000.
Single tax filers who earn up to $125,000 are eligible for
the total credit amount. Those who earn more than this cap can receive a partial
credit. However, single filers who earn $145,000 and above are ineligible
Joint filers who earn up to $225,000 are eligible for the
total credit amount. Those who earn more than this cap can receive a partial
credit. However, joint filers who earn $245,000 and above are ineligible.
What Type of Home Qualifies For Tax Credits?
As long as you purchase a primary residence, the tax
credit is available to these qualifying 'homes': single-family detached homes;
attaches homes such as townhouses and condominiums; manufactured homes and
houseboats used for principal residences also qualify.
Homebuyers who sell their homes within three years (36
months) will have to repay the tax credit.
Ready to buy one of the Fairfax County VA homes for sale?
Call Steve Hawkins now at 703-909-3939.
