Are you a first time home buyer in the market to purchase the home of your dreams? You may not be aware that there are many benefits in home purchasing as first time home buyers. The Government has been working together with first time home buyers, to help them save money and purchase something at a reasonable price, by giving them grants to be used toward the purchase of their first home.
A tax credit of up to $8000.00 is granted to first time buyers. This is all part of the Recovery and Reinvestment Act of 2009, something that will not only benefit first time home buyers, but will also help to stimulate the economy and get out of this recession. IN order to qualify for this tax credit, you must first make a purchase on or before January 1, 2009 and before December 1, 2009. The purchase date will be the date the house closes escrow.
Qualifying for the tax credit is simple. You are considered first time home buyers if you have not purchased a property 3-years prior to the date of purchase. Keep in mind, if you are married, and your significant other has in fact made owned a home in the last 3 years, neither of you will qualify for the credit. If an unmarried couple wants to take advantage of the tax credit, and one of them owned a home in the last 3 years, the one who has not owned will still qualify, the tax credit will then be transferred to the qualifying party.
The tax credit is based on 10 percent of the purchase price, but will not exceed $8000.00.
Qualifying for this benefit is also based on your income. Married couples should have a joint income of at least $150,000 with unmarried couples at an income of $75,000. Also keep in mind, that this tax credit does not have to be repaid. The tax credit is claimed on your Federal tax return form 5405, this will determine your tax credit amount, which you will then want to claim on your 1040 income tax form, line 67. If you have purchased a house in 2009, and received the tax credit toward your purchase, you can choose to claim it against your 2008 tax return or wait to claim it on your 2009 return. If you have filed your 2008 return prior to your purchase, you may amend the tax return if you do not want to wait until the 2009 tax season. This is something you would want to ask your tax professional about prior to making a decision. Also, the home that you purchase, must be used for your principle residence for at least 3-years, or the IRS may try and take the $8000.00 credit back from you. Vacation homes do not count as a principle place of residence.
This $8000.00 tax credit can be used towards your down payment. Again, something you would want to speak to your tax professional about. Time is running out for this great opportunity, first time home buyers seek the proper advice and make the choice that is right for you.