I Would like to share with you some thoughts and information that I recently received from Clark Toole, the President Coldwell Banker Residential Real Estate……

“As you may have heard, significant improvements in the temporary First-Time Homebuyer Tax Credit were signed into law on February 17 as part of the American Recovery and Reinvestment Act of 2009 to provide a housing stimulus for first-time home purchases that close between January 1 and November 30, 2009.

This is even better news for first-time homebuyers than the tax credit announced in April 2008 because not only has the tax credit maximum increased from $7,500 to $8,000 – more significantly – it does not need to be repaid unless you resell the home within three years.

Here are the highlights for potential first-time homebuyers.

  • Credit maximum was increased from $7,500 to $8,000. The credit is calculated as 10% of the purchase price. Example: If the purchase price is $70,000, the credit is $7,000.
  • Removed the repayment requirement, provided the homebuyer does not resell the home for three years.
  • Eligibility remains for first-time homebuyers only. In this case, a first-time homebuyer is defined as an individual who has not owned a primary home at any time during the three years prior to purchase, but who may have done so prior to that time. Although certain income limits do apply, the amount of the credit is the same for all taxpayers, married or single.
  • To be eligible for the full tax credit, the homebuyer can have an annual adjusted gross income of no more than $75,000 ($150,000 on a joint return).  A homebuyer with an annual adjusted gross income above that level, and up to $95,000 ($170,000 on a joint return), is eligible for a reduced tax credit.
  • The refundable tax credit can be claimed on the purchase of one’s individual or joint tax return for any single-family home that closes between January 1, 2009 and November 30, 2009. It can be claimed on a 2008 tax return (to be filed by April 15, 2009), an amended 2008 tax return, or a 2009 tax return. Individuals should consult a professional tax advisor for specific details and restrictions, exact tax calculations and timing.

To further assist you, the National Association of Realtors® has prepared a Major Modifications Chart that you can use to understand the improvements made in the tax credit since last April. Be sure to note that you are not a tax or legal professional, and of course, encourage homebuyers to consult their own tax advisors. Keep in mind that this tax credit is retroactive.”

Thanks for the great info Clark!

Best,

Jill