No doubt you've heard something about the new $8000 tax credit available for first-time home buyers as part of the latest stimulus package. I wanted to provide you with a brief and easy-to-understand summary of what the credit means and who is eligible to take advantage of it.
The tax credit is for first-time homebuyers who purchase a home from January 1, 2009 to November 30, 2009. Those eligible can receive a credit of $8000 or 10% of the value of the home, whichever is lower.
This is a tax credit, meaning it is a dollar-for-dollar tax reduction. So for example, if you were to owe $8000 in income tax and you qualify for the $8000 tax credit, then you would actually owe nothing. And, the tax incentive is refundable. If you were to owe only $4000 in income tax and qualify for the $8000 tax credit, you can apply $4000 of the credit toward your tax liability and receive a check for the remaining $4000.
The tax credit is available for any home that will be used as a principle residence, including single-family homes (including manufactured homes), townhouses and condominiums. Keep in mind that you would be required to repay the credit if you sell your home within three years.
The incentive does begin to phase out for couples earning above $150,000 and single filers with incomes above $75,000. For more details on this and any other questions you may have, click here or feel free to give me a call.
Traverse City Real Estate - Jason Kudary Real Estate