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Home Sweet Tax Credit! | Congratulations, you've just taken another step up the American-dream ladder and are a homeowner. Along with the joy of painting, plumbing and yard work, you now have some new tax considerations.
A tax credit of up to $8,000 is now available for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before June 30, 2010. Unlike the tax credit enacted in 2008, the new credit does not have to be repaid.
$8,000 Home Buyer Tax Credit at a Glance
- The tax credit is for first-time home buyers only.
- The tax credit does not have to be repaid.
- The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
- The credit is available for homes purchased on or after January 1, 2009 and before June 30, 2010.
- Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.
Rules to remember
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The purchase of the home must be made between Jan. 1, 2009 and June 30, 2010.
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The buyers must live in the house for 3 years or more, or they will have to pay back the tax refund.
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The refund amount is $8000 or 10% of the home’s value - whichever one is less.
It is not a tax-deduction.
An example of a tax-deduction would be someone making $50,000 a year would only have to pay taxes on $42,000 ($50K-$8K=$42K). While that is nice, this is a whole lot better for individual taxpayers.
It is a tax credit.
Since it is a tax credit, it will show up a tax refund for most people. For example, if you paid $3000 in taxes this year and after doing your taxes found out that the IRS owed you a $500 refund, you would now get $8500 back.
From what I understand the only way you wouldn’t get at least $8000 back is if after doing your taxes you owed $1000 to the IRS, you would then get a refund check of $7000 ($8000-$1000).
What you need to do to get it
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Buy a house before June 30th, 2010.
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Claim it on your tax return.
Frequently Asked Questions About the Home Buyer Tax Credit
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Jodie Hurt – Charleston Air Force Base, SC Real Estate For Sale
I specialize in helping military families enjoy a smooth PCS in and out of Charleston Air Force Base, South Carolina. I have a passion for helping people, and I love what I do. Call me (843) 819-4398 and let me make this the easiest PCS yet!
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