What is the first time home buyer $8000 tax credit all about?
Question by NIcole: What is the first time home buyer 00 tax credit all about?
I am thinking of buying a home by the end of the year. Can someone explain what this $ 8000 First time home buyer tax credit means exactly??
Best answer:
Answer by wayfaroutthere
When you file your taxes, you get $ 8000 off your taxes. If you usually get a refund, you’ll get $ 8000 extra since it is a refundable credit.
Do note that you need to close by the end of Novemeber, unless Congress extends the credit another yer.
Know better? Leave your own answer in the comments!
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Filed under: First Time Home Buyer Tax Credit
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Congress has improved this plan from the first version that came out last year. Most of the mechanics of the credit will be the same as under the 2008 rules:
•The credit will be claimed on a tax return to reduce the purchaser’s income tax liability.
•If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.
Congress Improves Homebuyer Tax Credit
•The credit amount is increased from $ 7500 to $ 8000.
•The credit continues to apply only to first-time homebuyers.
•Changes are effective for purchases on or after Jan 1, 2009 and before Dec 1, 2009.
•2009 purchasers can make an election to claim the credit on their 2008 tax return.
•The credit is refundable. The amount of the refund is computed as part of the 1040 tax return filing.
•The unpopular repayment feature of the 2008 version is eliminated for 2009 purchasers. Unfortunately, eligible 2008 purchasers will still be required to repay the credit.
•While the repayment is eliminated for 2009, any credit that is taken for 2009 will be recaptured and paid to the IRS from sales proceeds if the residence is sold within three years of the date of purchase.
•DC homebuyers are eligible for the $ 8000 credit (In 2008, DC homebuyers had a separate, nonrepayable $ 5000 tax credit available to them that had already been in effect for several years.)
•Purchasers who finance their 2009 purchases with funds from a state/local housing bond authority will be eligible for credit.