The President signed the economic stimulus package just now in our own capital city of Denver. Only time will tell if it will be of long-term effect on the overall economy, but there’s hope that the Federal Housing Tax Credit, in combination with the great values in real estate right now, will pump some life into the housing market.
The federal housing tax credit is designed to bring buyers into (or back into) the market. It’s pretty simple at face value: qualified buyers will receive a credit of $8,000 on their 2008 or 2009 tax return.
Here are a few more details and caveats:
• Tax credit is $8,000.00, or up to 10% of the value of the home, so unless you’re buying a house less than $80,000, you’ll get the full $8,000 credit.
• You qualify if you made $75,000 or less on 2008 taxes if filed as single – if filing jointly, you qualify if you made $150,000 or less.
• If you make more than $75,000 but less than $95,000 ($170,000 if filing jointly), you can still get a partial tax credit.
• Tax credit applies to first-time home buyers. You are a first-time home buyer if you have not owned a home in the previous three years. (Technically, this doesn’t apply to just “first-time” home buyers, then.)
• Applies to your primary residence only.
• This is a tax credit, not a deduction – meaning your tax “bill” will be reduced, not your taxable income. For instance, if you underpaid your taxes by $3,000, the first $3,000 of the credit will be applied to your outstanding tax bill and you would then receive the remainder of $5,000. If all your taxes were correctly withheld from your paychecks and you don’t owe anything when you file your taxes, you’ll get all $8,000 to yourself.
• Credit will be applied against your tax bill for either 2008 or 2009. If you’ve already filed your 2008 taxes, you can amend it to reflect the credit.
• Credit applies to homes purchased from January 1st, 2009 to November 30, 2009. The closing date is the one that matters.
• Unlike an earlier version of this bill, this credit does not have to be repaid, unless you sell the house in less than three years.
• Applies to new or existing homes.
If you really, really want the nitty gritty, you can read the full bill. Still have questions? You can leave a comment on this post or email Jeremy directly at Jeremy@SpringsRealtor.net. We’ll answer it ASAP!