I have to first preface this post by stating that I am not a tax advisor and cannot guarantee any of the following information. But I can let you know some of the requirements and stipulations for qualifying for the First Time Homebuyer tax credit.
First time homebuyers who purchase a primary residence home between January 1, 2009 and December 1, 2009 can file for a tax credit of up to $8000. This tax credit is capped at 10% of the sales price (i.e. if you purchase a home above $900,000.00, you will still be capped at $8000, not 10% of a higher sales price).
A tax credit is much better than a tax deduction because it can translate into money in your pocket. For instance, if you end up owing $5000 in taxes at the end of the year, $5000 of the credit will be used towards paying those, and the remaining $3000 will come back as a refund to you. It’s a very hot incentive to get people to buy homes!
Here are some of the highlights and requirements:
- Must be a first time homebuyer (by definition, anyone who has not owned a home within the previous 3 years)
- The purchase must be for your primary residence, not a 2nd home or investment property
- IMPORTANT: For the full credit, you must fall within specified Modified Adjusted Gross Income (MAGI) limits. Single Taxpayer: MAGI of $75,000 or less. Married Taxpayers: MAGI of $150,000 or less.
If you exceed these limits, you can still be eligible for a partial tax credit.
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