Understanding the $8k Tax Homebuyer Credit

To motivate homebuyers and to get the economy on track, the US Congress has enacted a piece of legislation to provide a tax credit to homebuyers. Although the new tax credit is limited to those who are buying a property for their first time & will only be good for purchases made between January 1, 2009 and 12/31/09, the new credit will reward buyers with up to $8,000 in tax credit. In addition, much unlike previous credits that had been offered to buyers, the new credit does not have to be repaid.

To qualify for the new credit, buyers must meet certain qualifications. The they must be a first time homebuyer. The the individual purchasing the home must be a first time buyer, which is defined by the legislation as someone who hasn’t owned a principal residence for the last three years prior to making the purchase. There are also income restrictions placed on who is eligible to get the credit, with the tax credit being only available to single taxpayers who have an income of up to $75,000 and married taxpayers who have an income of up to $150,000.

The actual amount of the tax credit the homebuyer receives is dependent upon the purchase price of the property, with the amount of the credit being equivalent to 10%. However, there is an $8,000 ceiling on that amount. Thus, if the purchase price of the property is higher than $80,000, the buyer can’t receive more than $8,000 in tax credits.

Under the new law, any home that is used as a primary residence is eligible for the credit. , but isn’t limited to:

Single-family detached houses

Townhouses

Condominiums

Manufactured properties

Boathouses

Newly built houses are also eligible to receive the new credit, so long as the settlement date occurs between January 1, 2009 and December 1, 2009, for properties bought from a house builder. Meanwhile, Homebuyers who build a house on a lot they previously owned can still receive the tax credit if the date they occupied the property was on or after 1/1/09 or before December 1, 2009.

It’s paramount to take note that although the new tax credit legislation differs from past legislation because the new tax credit does not need to be paid back, the buyer must use the house as their primary residence for a period of at least three years. Otherwise, the credit would need to be paid back.

Find more about The New Homebuyer Tax Credit or look at Lake Austin houses in Austin, TX for sale.