IMPORTANT UPDATE: The first time home buyer tax credit has been officially extended to include homes purchased between January 1st, 2009 and April 30th, 2010. The original deadline was December 1st, 2009. The income limits for those eligible under the new provisions have also been raised to $125,000 for single tax payers (from $75,000) and $225,000 for married tax payers filing jointly (from $150,000) for sales occurring AFTER November 6th, 2009. The old limits still apply for sales between January 1st, 2009 and November 6th, 2009. The first time home buyer credit is reduced for single tax payers earning between $125,000 and $145,000 and for married tax payers (filing jointly) earning between $225,000 and $245,000. Singles earning more than $145,000 and couples filing jointly and earning more than $245,000 are not eligible for the first time home buyer credit.
Since the decline of the economy, the federal government has taken several actions meant to assist families and those adversely affected shaky job prospects and housing markets. Their policies revolve around the $787B stimulus package that was passed late last year. One provision, for example, allows home owners the ability to refinance their mortgage again despite having a low home equity. The also have the option to have their loan interest rates reduced. There are also elements of the stimulus package that could benefit first time home buyers. Under the guidelines of the bill, the first time home buyer stimulus package consists of increasing the home buyer credit. First time home owners can also avoid foreclosure in the midst of housing market that looks bleak and job cuts are rampant.
Prior to the passage of the stimulus package, the first time home buyer credit was only recently changed for the 2008 tax year. For homes that were bought in 2008, the credit was $7500 and was considered like a first time home buyers loan that was to be paid back over fifteen annual payments of $500 apiece. Under the stimulus package, the home buyer credit has been changed and increased to $8000 and more importantly, does not need to be paid back. This change in the policy applies to homes bought in 2008 so all new home buyers from 2008 and 2009 can benefit.
For taxpayers who filed their return under the old $7500 policy, an amended return can be filed to ensure that you receive the appropriate credit for your home purchase. Remember that the home must actually be paid before the credit can actually be claimed. Similarly, if you are building your own home, the IRS considers the purchase date to be the first actual date that you occupy your home. As long as you intend to occupy your home for at last three years, there is no need to repay the tax credit. However, if you change your mind and sell your home before the end of the first three years, then the credit must be repaid. This is to discourage “house flipping”. Additionally, if the home is no longer your primary residence by the end of the first three years, then the tax credit must also be repaid at that time.
For tips and facts about how you can benefit from Obama’s Home Stimulus Plan – or to find out if you qualify, visit our no nonsense home stimulus guide: http://ObamasStimulusPackage.net/stimulus-package-information