If you are like a lot of my clients, you have many questions about the first time home buyers tax credit that everyone is talking about. With house prices so low and the interest rates to match, the tax credit only adds to the urgency potential home buyers feel when they are contemplating a home purchase.
This article is certainly not intended to be an exhaustive explanation or a substitution for advice from a legitimate tax advisor. It is intended to answer some basic questions and clear up some of the confusion surrounding the tax credit. So please, read on and contact me with questions you may have!
The first question I hear is “How do I know if I am eligible for the first time home buyer tax credit”? Here are a few points to consider:
New Home or Resale
It doesn’t matter if your dream home is a new home or a resale, they both qualify.
The Time Factor
The next question to ask is how long has it been since you have owned a home? If it has been more than three years, pass go and collect up to $8000, you qualify!
There is one caveat. If you are married, then both you and your spouse cannot have owned a home in the last three years. Let me explain a bit further. If you have not owned a house but your spouse owned a house 2 years ago, your purchase will not qualify for the tax credit. It acts as if the marriage is the purchaser, not the individual. You know, the whole two become one thing!
Purpose
What is the main purpose of this home? The purpose of the tax credit is to help entice those who don’t already live in a home they own to purchase one. If you are to qualify for the credit, the home must be your primary residence. This credit won’t help investors or landlords who already own a primary residence, sorry!
The next set of questions I am asked relate to the details about the terms of $8000 tax credit.
How Long Will The $8000 Tax Credit Be Offered?
You only have until November 30th, 2009 to close on your house. This means that you have already found a house and have purchased it before this date. i.e. you have received the keys to move in to your new home. The term for this is called the Close of Escrow or COE.
How Do I Calculate How Much of the $8000 Tax Credit I Qualify For?
You will receive 10% of the purchase price of the home back in the way of a tax credit. The maximum amount you can receive is $8000. Please consult with your tax professional to understand the procedure for claiming this credit.
These are just some of the basics that should get you up to speed with the $8000 Tax Credit. A few other things to take into consideration can be found on my website, http://askerealestate.com. To see more common questions with explanations, please visit www.askerealestate.com/8000taxcredit or www.AskeRealEstate.com.
This post is written by Sean Aske who is a Realtor in the Phoenix Metro area. He specializes in the Arcadia area whether you are looking for Arcadia homes for sale, Arcadia home prices, or even just an Arcadia Realtor. He also works in additional areas such as Phoenix, Scottsdale, Paradise Valley, Biltmore, and the Camelback Corridor. Please contact him with any questions.