Homebuyer Tax Credit Increased to $8,000

On February 17th, 2009 Congress passed and President Obama signed into law the American Recovery and Reinvestment Act of 2009 known as "The Stimulus Plan". One of the key provisions for real estate purchasers is the expansion of the home buyer tax credit program. It's a major perk for certain home buyers.

1. This program's full benefits are available for single persons with adjusted gross income (line 37 on your 2008 1040 federal income tax return) up to $75,000 0r $150,000 for married couples filing a joint return. Partial benefits are available for single persons with incomes between $75,000 and $95,000, or for married couples filing jointly with incomes between $150,000 and $170,000. You may take the tax credit in either 2008 or 2009. If the eligible purchaser's federal income tax liability is less than the homeowner tax credit, the purchaser may receive a refund from the IRS for the unused amount. Consult your tax advisor for full guidance. This is merely meant to introduce you to the possibilities that may be available to you within this program.

2. When you hear on the news that this program is only for first-time buyers that's not entirely true. This program benefits first time buyers and anyone who hasn't owned a home in the immediate three previous years.

3. The program has been expanded. The maximum* tax credit is now $8,000 for eligible buyers (see #1 above) instead of last year's $7,500.

* The tax credit amount is 10% of the cost of your home up to a maximum of $8,000. If you sell the home after receiving the tax credit you would owe the government a repayment for the tax credit taken plus the amount of refund to you as a result of this program. The IRS will be providing further guidance regarding how this can be accomplished.

Note 1: buyers who use state revenue bond financing may also use this tax credit. This could include the OHFA Bond Loan or their MCC tax credit.

Note 2: You cannot purchase a home from a close relative and receive this credit. This could include your spouse, a parent, a grandparent, a child or a grandchild.

4. The most important feature is that this is a TRUE TAX CREDIT on the purchase of a new or an existing home.

Example: Let's assume that your tax liability would be $12,000. Simply subtract up to $8,000 from your normal income tax liability and your effective liability is reduced to $4,000 in this example. If you've already had $12,000 withheld from your pay for federal income taxes then you could receive an eight thousand dollar refund check from the IRS.

Last year's program required that you repay the tax credit amount back to the IRS. That's no longer the case for homes purchased between January 1, 2009 through November 30, 2009 unless you sell your home within three years. If you bought in 2008, any tax credit is subject to repayment to the IRS over a 15 year period. That was the 2008 plan.

This home buyer tax credit is for owner-occupied homes in the U.S. that are used as a primary residence. Vacation homes and rental property are not included. You can have only one principal residence at a time.

You can see that this program clearly offers tax advantages to certain prospective home buyers. Please call The Schrand Team (513-347-1715) to take advantage of this program yourself. Or tell a friend who may qualify. As stated above, please contact your tax advisor to confirm that this program will apply to you.