Published: Tuesday, Apr. 14, 2009 / Updated: Wednesday, Apr. 15, 2009 09:38 AM
Kathy's Korner - April 15, 2009
What to do with that $,8000 housing tax credit
- Katherine Miller
A lot of people are curious about the $8,000 tax credit for new buyers offered by the federal government as part of the stimulus plan. People are also confused about how it works.
| OK, does this mean you might get an $,8000 check from the government - gratis, no paying back? | |
| Yes! | |
| Visit www.FederalHousingTaxCredit.com, the source for the information that follows. | This tax credit is for first-time home buyers only. However, that's not as simple as it sounds. |
| You may be saying to yourself, "I don't own a home now, but I did five years ago," and wonder how that applies to you. | |
| Well, good news: you fit the criteria. For this program, the IRS defines a first-time home buyer as someone who has not owned a principal residence the last three years prior to the purchase. | |
| "But, do I have to pay it back?" is another important question. | |
| No! | |
| Last year's $7,500 credit did have to be paid back over a period of time. Not so with with this new credit. This is free money, people. | |
| The tax credit is equal to 10 percent of the home's purchase price up to a maximum of $8,000. Translation: You buy a $150,000 house. Ten percent is $1,500. Your tax credit is $,8000. You buy a $70,000 house. Ten percent is $7,000. Your tax credit is $7,000. | |
| Because I haven't seen a habitable abode in Fort Mill for $70,000, you are pretty safe to count on $8,000. | |
| This offer is not on the table for long, however. You must purchase a home between Jan. 1, 2009, and Dec. 1 (not Dec. 31!), 2009. | |
| Is this for everyone? No, and of course there is a catch - but not a bad one. The income level includes quite a few of us: single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit. Above these levels, the credit is gradually phased out. The tax credit is reduced to zero for taxpayers earning more than $95,000 (single) or $170,000 (married). | |
| Now, one more catch - and read closely. Home buyers must use the purchased residence as a principal residence for at least three years or face possible repayment. | |
| How do you claim this credit? Easy. Claim it on your federal income tax return next spring. If you paid and owe $5,000, then the government will send you a full refund of the $5,000 you paid in, plus $3,000 for the rest of the credit. | |
| Now, don't go buy a house just to get $8,000. But, if you are considering a purchase in the next few years, now truly is the time to buy. Never before have both prices and interest rates been so low at the same time. | |
| Good luck! |
