For 2009 Home Purchases

The American Recovery and Reinvestment Act of 2009 expanded the first-time homebuyer credit by increasing the credit amount to $8,000 for purchases made in 2009 before Dec. 1st.

For homes purchased in 2009, the credit does not have to be paid back unless the home ceases to be the taxpayer’s main residence within a three-year period following the purchase.

First-time homebuyers who purchase a home in 2009 can claim the credit on either a 2008 tax return, due April 15, 2009, or a 2009 tax return, due April 15, 2010. The credit may not be claimed before the closing date. But, if the closing occurs after April 15, 2009, a taxpayer can still claim it on a 2008 tax return by requesting an extension of time to file or by filing an amended returnOver the past 12 months there have been 2 incentive packages of a Tax Credit for 1st time homebuyers. Here are some of the differences between the 2 so everyone is aware.

Initial Tax Credit
Amount of credit- lessor of 10% of cost of home or $7500
Revised Change to a maximum credit to $8000

Initial Tax Credit
Revenue Bond Financing-no credit allowed if home financed with state/local bond funding
Revised Change to purchasers who utilize revenue bond financing can use credit

Initial Tax Credit
Repayment- yes. Portion (6.67% of credit or $500) to be repaid each year for 15 years, starting with 2010 tax filing
Revised Change to NO repayment for purchases on or after January 1, 2009 and before December 1, 2009

Initial Tax Credit
Recapture- if home sold before 15-year repayment period ends, then outstanding balance of repayment amount recaptured on sale.
Revised Change if home is sold within 3 years of purchase, entire amount of credit recaptured on sale. Applies only to homes purchased in 2009.

Initial Tax Credit
Termination of program July 1, 2009
Revised Change December 1, 2009

Initial Tax Credit
Effective Date- Purchases on or after April 8, 2008 and before January 1, 2009. Repayment to begin for 2010 tax year.
Revised Change all revisions are effective January 1,2009

There are a few things that remained the same between the 2 packages. Both are eligible on a primary residence only. Property type any single family residence (including condos, co-ops, townhouses) that will be used as a principle residence.

Both are refundable. It reduces (or can eliminate) income tax liability for the year of purchase. Any unused amount of tax credit will be refunded to purchaser. Both have income limits. Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on joint return). Phases out above those caps ($95,000 and $170,000).

This program is for 1st time homebuyers only. Purchaser (and purchaser’s spouse) may not have owned a principle residence in 3 years previous to purchase.

This program gives homebuyers a great opportunity and plenty of incentive to by a home. This in addition to the fact rates are still as low as they have been in decades. It is a great time to buy!

To apply for a home loan visit:

Ed Butler
Sr. Loan Officer
Cell 704-281-3822
E-fax 866-546-1902

ebutler@wrstarkey.com
www.EdButlerTeam.com