You have probably been hearing a lot about a $7500 tax credit for First-Time Home Buyers and if so would like to hear more. The tax credit is intended to provide a financial resource for home buyers the year they buy a home and to stimulate the housing market and our economy by increasing home sales.

Yes, it is true if you purchase a home between April 19, 2008 and June 30, 2009 you may qualify for up to $7500 that can be deducted from you tax liability. This is not a deduction but a credit. So if you owe $8000 in taxes you will be able to reduce that liability to $500.00. If you don’t owe anything you may get back up to $7500 when you file your taxes.

To be eligible you must not have owned a home in the past 3 yrs (you can have owned a home prior to 3 yrs ago) and the home you purchase must be a primary residence.  Be a US Citizen who files a tax return. Close on the home between April 9, 2008 and June 30, 2009.

The full credit is based on 10% of the purchase price of the home up to $75000.  The limit is $7500 but if your home only costs $60000 then you would expect a credit of $6000.  If your adjusted income is $75000 filing single or $150000 filing joint your credit would be up to $7500 but a partial credit is available for adjusted income up to $95000 and jointly $170,000.

There is a pay-back provision though.  If you claim the credit you will be required to repay at $500 a year for 15 years but it is waived for the first 2 years. If you sell the home before the credit is paid back it will deducted from your profit. If there is insufficient profit from the sale the remaining credit would be forgiven. 

This could be a great way to pay off some debts or pay down your principal. The payback is interest free!

It is still a buyers market so give me a call 859-229-5945 and let’s get started searching for your new home.

Shari

Disclaimer: This is not intended to provide legal, financial, tax or accounting advice only information so please consult your professional in these areas for more details.