Monthly Archives: June 2009

$8,000 Tax Credit for First Home Buyers

Are you aware of this financial incentive available to new buyers?

Here is a brief overview prepared by DIGIOVINE HNILO JORDAN + JOHNSON LTD.
Solutions for Success.
www.dhjj.com:

■ For qualifying purchases of a “principal residence” within the U.S. made from January 1, 2009 and before
December 1, 2009.
■ The credit is the lesser of 10% of the purchase price or $8,000.
■ “First-time homebuyer” is any individual (if married, and their spouse) who is a US resident if they had no
ownership interest in a home during the three years previous to the day of the purchase.
■ Purchases from a relative do not qualify for the credit (sibling, parent, grandparent, aunt or uncle).
■ “Purchase date” for homes under construction is the date of occupancy.
■ There is no repayment of the $8,000 credit as long as the home continues to be the taxpayer’s principal
residence for 36 months from the date of purchase. Exceptions to this are death, divorce settlement or
involuntary conversion.
■ The credit also does not apply if the taxpayer’s financing is from
proceeds of tax-exempt mortgage revenue bonds or if the District of
Columbia homebuyer credit is taken for the tax year the residence is
purchased.
■ The credit phases out for taxpayers with modified adjusted gross
incomes between $75,000 and $95,000 ($150,000 – $170,000 for joint
filers).
■ This is a “refundable” tax credit (which means it can be used to
offset your tax liability with any remaining credit refunded).

How to obtain the credit:

  • The credit can be claimed on either the 2008 or 2009 tax return.
  • Note: If the 2008 tax credit is limited because of income
    limitations, taxpayers will need to consider both years to determine
    which year to take the credit for the greatest benefit.
  • Any first-time homebuyers who believe they are eligible for all or
    part of the credit can modify their income tax withholding (through
    their employers) or adjust their quarterly estimated tax payments in
    order to reap the benefits prior to the filing of their tax return.
  • Note: On May 29, 2009, HUD announced that individuals will be able
    to secure short-term bridge loans to apply the first-time homebuyer
    credit to their down payment. The home buyer must be using an FHA
    approved loan. The tax credit can generally not be used to meet the
    3.5% minimum down payment required by the FHA.

For more information, please visit www.dhjj.com or call Kara Bourbon at 630-420-1360.