Real Estate Search Direct

Do you qualify for the first time home buyer tax credit?

If you’ve heard about the first time home buyer tax credit and you are wondering if you qualify, check the requirements below:

• If you (and your spouse, if applicable) have not owned a principal residence in the past 3 years,
• have purchased or will purchase a home that will be used as your principal residence on or after January 1, 2009 and before December 1, 2009,
• and made less than $95,000 Adjusted Gross Income (or $170,000 on a joint return) in 2008.

Home buyers meeting these requirements are eligible for a tax credit on their 2008 income taxes.  The credit will be applied to any income tax owed and any excess will be refunded. What if you have already filed your 2008 income tax?
If you have already filed your 2008 income tax, you can file an amended return to claim the tax credit.

The amount of the credit will be 10% of the purchase price up to $8000 for buyers with an Adjusted Gross Income of less than $75,000 ($150,000 filing jointly).  For buyers with an AGI greater than $75,000 ($150,000) the amount of the credit will be phased out reaching $0 when the AGI reaches $95,000 ($170,000).

To calculate the exact amount of the phase out between $75,000 t0 $95,000 subtract your AGI from $95,000 and divide by the $20,000 range, then multiply by 10% of the purchase price or $8000, whichever is greater.

An example:

John bought a house for $72,000.  10 percent of that is $7200.  John has an Adjusted Gross Income of $91,500.  Subtract $95,000 – $91,500 = $3,500.  Divide this by $20,000 = 3500/20000= .175.  Multiply this by $7200 and you get
a tax credit of $1260.

So with all that said, do you qualify for the first time home buyer tax credit?

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Allen Davis
RealEstateSearchDirect.com