Wednesday, May 20th, 2009...9:24 am
$8,000 Government Tax Credit Now For Down Payments
The recent downturn of the real estate market pushed panic through many American citizens. In an attempt to calm the storm, our government put forth the American Recovery and Reinvestment Act of 2009; which can be read about at http://www.Recovery.gov. This Act includes a tax credit of up to $8,000 for first time homebuyers. Originally, a homebuyer could access this credit only after filing their 2010 tax return. HUD, the U.S. Department of Housing and Urban Development, recently announced the tax credit can be used towards closing costs and/or down payments; more information is available at http://www.hud.gov/news/release.cfm?content=pr09-072.cfm. You should be prepared for a number of additional steps to the receiving process of this credit at closing. You can visit http://www.arizonamortgageteam.com/new-home-buyer-8000-tax-credit-down-payment-answers-to-questions/ for a good review of the process.
| FEATURE | CREDIT AS CREATED JULY 2008 APPLIES TO ALL QUALIFIED PURCHASES ON OR AFTER APRIL 9, 2008 | REVISED CREDIT – EFFECTIVE FOR PURCHASES ON OR AFTER JANUARY 1, 2009 AND BEFORE DECEMBER 1, 2009 |
| Amount of Credit | Lesser of 10% or cost of home or $7500 | Maximum credit amount increased to $8000 |
| Eligible Property | Any single family residence (including condos, co-ops, townhouses) that will be used as a principal residence | No change, All principal residences eligible |
| Refundable | Yes. Reduces (or can eliminate) income tax liability for the year of purchase. Any unused amount of tax credit refunded to purchaser. | No change, Purchasers will continue to receive refund for unused amount when tax return is filed. |
| Income Limit | Yes. Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($15,000 on a joint return). Phases out above those caps ($95,000 and $170,000). | No change, Same income limits continue to apply. |
| First-time Homebuyer Only | Yes. Purchaser (and purchaser’s spouse may not have owned a principal residence in 3 years previous to purchase. | No change, Still available for first-time purchasers only. Three year rule continues to apply. |
| Revenue Bond Financing | No credit allowed if home financed with state/local bond funding. | Purchasers can utilize revenue bond financing can use credit. |
| Repayment | Yes. Portion (6.67% of credit or $500) to be repaid each year for 15 years, starting with 2010 taxes. | No repayment for purchases on or after January 1, 2009 and before December 1, 2009. |
| Recapture | If home sold before 15 year repayment period ends, then outstanding balance of repayment amount recaptured on sale. | If home is sold within 3 years of purchase, entire amount of credit is recaptured on sale. Applies only to homes purchased in 2009. |
| Termination | July 1, 2009 (But note program changes for 2009) | December 1, 2009 |
| Effective Date | Purchases on or after April 9, 2009 and before January 1, 2009. Repayment begins after 2010 tax year. | All revisions are effective as of January 1, 2009. |
This information is for educational purposes only and shall not be construed as legal advice.
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