Home Buyer Stimulus Plan at a Glance

$8000 First-Time Home Buyer Stimulus

·         The $8000 tax credit is for first-time home buyers only.  For the tax credit program, the IRS defines a first-time home buyer as someone who has not owned a principal residence during the three-year period prior to the purchase.

·         The tax credit does not have to be repaid unless the home is sold or ceases to be used as the buyer’s principal residence within three years after the initial purchase.

·         The tax credit (NOT a deduction) is equal to 10 percent of the home’s purchase price up to a maximum of $8000.

·         The tax credit applies only to homes priced at $800,000 or less.

·         The tax credit now applies to sales occurring on or after January 1, 2009 and on or before April 30, 2010.  However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.

·         For homes purchased after November 6, 2009 and on or before April 30, 2010, single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

$6500 Move-Up / Repeat Home Buyer Stimulus

·         To be eligible to claim the tax credit, buyers must have owned and lived in their previous home for five consecutive years out of the last eight years.

·         The tax credit does not have to be repaid unless the home is sold or ceases to be used as the buyer’s principal residence within three years after initial purchase.

·         The tax credit (NOT a deduction) is equal to 10 percent of the home’s purchase price up to a maximum of $6500.

·         The tax credit applies only to homes priced at $800,000 or less.

·         The credit is available for homes purchased after November 6, 2009 and on or before April 30, 2010.  However, in cases where a binding sales contract is signed by April 30, 2010, the home purchase qualifies provided it is completed by June 30, 2010.

·         Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for full credit.

What is the difference between a credit and a deduction?

·         A tax deduction only reduces the tax payers’ taxable income where a tax credit is a dollar-for-dollar reduction in what the taxpayer owes.

·         That means that a taxpayer who owes $1,000 in income taxes and who receives an $8,000 tax credit will receive a $7,000 refund from the IRS.

·         The buyer must live in the home for at least 3 years or they will be obligated to pay back the tax credit in full.

Who is the next person you know who may be moving and could take advantage of these great incentives? 

Contact us with their information and we’ll take great care of your friends.