First Time Home Buyer Tax Credit
March 18, 2009
The First Time Home Buyer Tax Credit is a popular tax topic but it’s not the only tax credit or tax deduction that’s new or different for your 2008 taxes. Whether you use a tax preparer or do it yourself with tax software we’ll take a look a some of the changes you should be aware of for your 2008 tax return.
First Time Home Buyer Tax Credit
Anyone who bought their first home after April 8, 2008 may qualify for a new tax credit equal to 10 percent of up to $75,000 of the purchase price. It doesn’t absolutely have to be your first home — you’re eligible if you haven’t owned a residence in the U.S. in the previous three years.
The credit phases out between $150,000 and $170,000 of adjusted gross income for joint filers and $75,000 to $95,000 for single filers. It is refundable if it exceeds your regular tax liability, but it doesn’t offset the alternative minimum tax if –- which means that if it more than offsets your tax liability, you’ll get a refund check — but does not offset the alternative minimum tax.
Also, you should be aware that you need to repay this credit at roughly $500 a year until it is repaid, and if you sell before it’s repaid, you’ll end up repaying the balance the year you sell. However, if your profit on the sale is less than the remaining balance on the credit, the amount you have to repay is limited to your total profit.
Tax Brackets
Washington has broadened the tax brackets somewhat, meaning that all tax brackets are set at levels of income that are roughly 2 percent higher than they were in 2007. Basically, the higher your income, the more you save as more dollars fall into lower brackets.
Tomorrow we’ll cover changes in personal exemptions, standard deductions, disaster damage tax relief, and taxes on retirement accounts.
This post on the First Time Home Buyer Tax Credit is produced in association with the Financial Planning Association (FPA), the leadership and advocacy organization connecting those who provide, support and benefit from professional financial planning.
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If you bought a house in 2009 you can also claim this on your 2008 taxes (or if you buy one later this year you can amend your 2008 return). The terms for 2009 are much different though. The credit is equal to 10 percent of up to $80,000 of the purchase price, so many people will get an $8,000 credit that does NOT have to be paid back, unlike the 2008 credit that does have to be paid back. The IRS form specifically asks if you bought your house in 2008 or 2009 and says how to handle each year.
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I have a question about this first time home buyer credit. I bought my house January 17th 2008 and don’t qualify for this credit. What was the point of starting the credit in April rather than January?
My question is the same as Tamara? Why April 8? We closed on 2/14/08. January 1, 2008 seems like a more logical date. But, of course, stupid me for applying logic to anything Congress does.
Would this $8,000. tax credit be applicable to a person who purchases a boat, that has never owned a home?
[...] First Time Home Buyer Tax Credit [...]
I think the tax credit is completely inane. While shopping for a home with the $8000 credit in mind, never once did anyone mention an income limit. Now as of November 6, 2009… the income limit for the credit has been raised, making my Fiance and myself both eligible, but the new stipulation is that the home has to be purchased AFTER November 6, 2009, making up disqualified once again… being as we closed on September 1, 2009. How is it anywhere close to being fair when there are multiple time frames with different sets of rules, I think they will just keep changing the qualifications around to keep anyone from actually getting it!!!