Tom Sells Sevierville
Smoky Mountain Area Homes & Land
First Time Home Buyer - Tax Credit
The compromise on the House and Senate 2009 Stimulus Law provides for an
$8,000 tax credit for first time home buyers who purchase a primary residence
after December 31, 2008 and prior to December 1, 2009.
This 2009 legislation modified the 2008 law which created a $7,500 credit that
the taxpayer had to repay to the government over fifteen years.
The big difference with the 2009 stimulus law is that the $8,000 credit does not
have to be repaid to the government provided the home is owned for three years for
homes purchased between January 1, 2009 and before December 1, 2009.
This is a great benefit for First Time Home Buyers ! Don't miss out on this fantastic opportunity !
Eligibility:
First time home buyers: Single person who has not owned a primary residence in three years prior to closing.
If married, each person must not have owned a primary residence three years prior
to closing.
Amount of Credit:
Lessor of 10% of the sales price or $8,000. Any purchase over $80,000 gets the full credit.
Must the Credit be paid back?
No repayment for purchases after December 31, 2008 as long as the taxpayer holds the home for three years.
For purchases between April 9, 2008 and December 31, 2008, the $7,500 credit is repaid over
fifteen years or upon sale of the home.
What is a Tax Credit?
Unlike a tax deduction which reduces the taxable income subject to tax, A Tax Credit is real money, a dollar for dollar
reduction in your tax bill.
If you owe the IRS $2,000 and have the full credit, you get back $6,000.
If you are entitled to a $1,000 tax refund and have the full credit, you get back $9,000.
Even if the purchaser does not owe taxes they get back $8,000.
What are the income limits for buyers seeking the credit?
For a full credit, a single taxpayer must have a modified adjusted gross income of $75,000 or less, the credit is
phased out completely by $95,000.
Married taxpayers get the full credit if their modified adjusted gross income is $150,000 or less, with the
credit phased out completely at $170,000.
What type of homes qualify?
Single family dwellings, condominium units, manufactured or mobile homes, and planned unit developments.
The property must be a primary residence for the homeowner.
Can the taxpayer build the new home?
Yes, as long as its occupied by the taxpayer before December 1, 2009.
Do Owner Financed Sales Qualify?
If it is a lease purchase, you must exercise your option and take title before December 1, 2009.
Straight owner finance deals where the buyer gets a deed and signs a mortgage with the seller qualify for
the credit, even if it is a 100% seller financed transaction and is closed before December 1, 2009.
When do I get the money?
A taxpayer who has not filed their 2008 tax return may treat a 2009 purchase as having occured on December 31, 2008,
and get their money in 2009 as part of their 2008 refund.
Most taxpayers will get the credit in 2010 when they file their 2009 tax return. The taxpayer is also allowed in 2009 to
reduce the federal withholding with their employer and have less money withheld from each paycheck.
Always verify the details and your qualifications with your personal tax advisor.
