The tax credit is back, that is good news.  It is a follow up to my blog Housing and Economic Recovery Act of 2008, Part I   and part II   and part III .

I asked a local accounting firm which I recommend to give us some tips:

Diane W Clough Cpa Ltd, 6130 W Elton Av, Las Vegas, NV

1 (702) 870-0888         cloughcpa@att.net

Thank you Diane.

 FIRST TIME HOME BUYER $8,000 TAX CREDIT

  • $8,000 TAX CREDIT (NOT DEDUCTION). A tax credit lowers your tax bill dollar for dollar. A deduction shaves money off your taxable income, so the value depends on your tax bracket. The tax credit is 10% of the home’s sale price with a maximum of $8,000. Here is a TABLE  provided by National Association of REALTOR® showing a comparison between the $7500 Tax credit from 2008 and this $8000 credit in the stimulus bill.explaining the difference between the $7,500 and the $8,000.
  • NO PAY BACK. This credit existed last year, there was a requirement that it be paid back, interest free of 15 years.
  • CLOSED IN 2008? You closed in 2008? You are stuck with the old model, and will have to pay back the credit, but there is talk of this debt being forgiven.
  • WHEN TO BUY. People who buy homes between Jan. 1 and Dec. 1 of 2009 year may qualify for the $8,000, no-repayment credit.
  • WHAT IS A FIRST TIME BUYER? Either they have never owned a house before, or they haven’t owned or co-owned one during the three years preceding the date they close on their 2009 purchase. Carefully planning the timing of a closing could be worth thousands of dollars.
  • HOUSEHOLD INCOME TEST. The income limit for single taxpayers is $75,000; the limit is $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced to zero for taxpayers with a MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.  The current program also removes last year’s prohibition against purchases financed with state and local tax-exempt mortgage revenue bond programs.
  • PRINCIPAL RESIDENT. The house you buy must be used as your principal residence, not a second home or investment property. But that residence can take a wide variety of forms, including “houseboats, housetrailers, cooperative apartments, condominiums,” among others, according to IRS rules.
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