Back HomeNew Tax Credit for First Time Homebuyers
One of the new exciting pieces of the Housing and Economic Recovery Act of 2008 that was signed into law on July 30, 2008 will benefit first time homebuyers. A first time homebuyer is defined as someone that has not owned a home in the last three full years. The new credit allows first time homebuyers of a primary residence to take a tax credit of $7,500. To qualify, the buyers must have income under a certain amount. A single taxpayer’s annual income must be under $75,000 annual income and joint filers under $150,000 annual income. The credit is phased out for single filers for incomes between $75,000 and $95,000 and for joint filers between $150,000 and $170,000.
This new incentive is a tax credit, not a deduction and there is a notable difference between a tax credit and a tax deduction. A tax credit lowers your tax bill dollar for dollar.
The $7,500 credit is essentially a zero percent loan that is paid back over 15 years at $500 per year with the buyer’s annual tax return filing. If the gain on the home is less than the balance that the buyer owes on the credit when they sell the property, the balance is forgiven. If the buyer passes away, the balance is also forgiven.
This credit is not just for people buying since the law was signed. It applies to purchases between 4/9/08 and 7/1/09. This is a great incentive to purchase and is only in effect for a short period of time. Please call me with any questions or to hear about other first time homebuyer programs available in Routt and Moffat County.
Kathryn Pedersen, VP
Yampa Valley Bank Mortgage
970-875-1609
