Everyone Should Claim Their Tax Credit!

Time is running out to claim your $8,000 tax credit.  Here is everything you need to know!

One of the measures taken in the Obama administrations economic stimulus package was a tax credit for first-time home buyers equal to $8,000 or ten percent of the value of the home, whichever is less.  The goal is to stimulate the real estate market by encouraging people to purchase new homes before December 1, 2009. This tax credit may be of particular interest to people considering buying a home, especially in markets where the real estate market has already bottomed out.

In July 2008 Congress passed a home buyers tax credit, which was helpful to some, but required repayment.  In effect it was an interest-free loan.  This new tax credit does not need to be repaid.  It acts as a grant rather than a loan.

To qualify as a first time home buyer, the buyer cannot have owned a home within the previous three years.  Homeowners who sold during the bubble without purchasing again may well qualify as a first time purchaser under this stimulus provision.  There are certain restrictions to the tax credit; a purchaser may not buy a home from family.  For these purposes family means parents, grandparents, children, a spouse or the spouses parents.  However, there is tolerance in the plan for owning rental property or a vacation home that has not been used as a primary  residence.

Be aware that income restrictions apply.  For full credit individuals cannot make more than $75,000 a year and couples who file joint returns cannot make more than $150,000.  However, income can exceed these amounts but the tax credit amount will be smaller than the $8000 or 10% of the homes value.  Individuals are ineligible for this tax credit if their income reaches $95,000, as are couples (filing jointly) with income exceeding $170,000.

If they qualified, home buyers were allowed by the IRS to file amended returns to claim this tax credit.  The refund could be received in fewer than 12 weeks.

The economic recession brought about the creation of this tax credit plan in order to help middle class families be able to purchase new homes.  However, the tax credit will not keep anyone from making a poor choice in his or her home purchase.  The wise home buyer will always take a close look at the local real estate market and in particular the property they are considering to evaluate whether home prices have reached their lowest point or not.  Once this information has been studied then the tax credit dollars could be the answer for those purchasing a home in these economic times.

Article Tags: Real Estate Market, Home Buyers, Real Estate, Estate Market

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