2009 Home Stimulus Plan

$8,000 Tax Credit: Are you Eligible?

The amount of the tax credit depends on the purchase price of your home. It can be as high as $8,000.00. In order to qualify for the whole $8,000 credit:

1. You must be a first-time home buyer.

The plan defines a "first-time home buyer" as "buyer who has not owned a principal residence during the three-year period prior to the purchase."

2. You must buy the house between January 1, 2009 and December 1, 2009.

You only qualify if you bought the house in this period. You do not qualify if you bought the house on December 2, 2009.

3. Your modified adjusted gross income (MAGI) must be less than $95,000.00 if you are an individual or $170,000 if you are a married couple filing a joint return.

You are eligible for the maximum of $8,000 if you have a MAGI of $75,000 for individuals and $150,000 for joint filers. As your income rises, the amount of available tax credit declines until your MAGI reaches $95,000, at which point you are no longer eligible for credit.

4. It must be your "main" house.

Sorry, the tax credit is not for investment properties or vacation properties.

"Main home" is defined by the plan as "any home that will be used as principle residence." This includes "single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats."

5. You must live in the home for at least three years after the purchase date.

You cannot buy and then move, sell, or otherwise leave the home you purchase for at least three years to retain eligibility to receive the tax credit.

6. You must buy a home which costs $80,000 or more.

To receive the maximum available $8,000 credit, you must buy a home for $80,000 or more because the stimulus plan is for 10% (i.e., 10% of $80,000.00 is $8,000.00).

Contact us today for more information on how to qualify.

 

Common Questions and Answers

How do I claim the tax credit?

Easily! You claim the tax credit on your federal income tax return. You will complete IRS Form 5405 to determine your tax credit amount. You will then claim this amount on Line 69 of your 1040 income tax return. No other applications or forms are required. No pre-approval is necessary. However, you will want to be sure that you and the house your purchase qualify for the tax credit under the income limits and first-time home buyer qualifications for eligibility.

Is this tax credit the same as a tax deduction?

No. A tax credit is a dollar-for-dollar reduction in what the you owe in taxes. For example, if you owe $8,000 in income taxes you receive an $8,000 tax credit, you would owe nothing to the IRS.

On the other hand, a tax deduction is subtracted from the amount of income on your return that is taxed. For example, assume you are in the 15 percent tax bracket and you owe $8,000 in income taxes. If you receive an $8,000 deduction, your tax liability would be reduced by $1,200 (15 percent of $8,000). In this situation, your tax liability would be reduced from $8,000 to $6,800.

If I bought a home in early 2009 and already filed to receive the $7,500 tax credit on my 2008 tax returns, how can I claim the new $8,000 tax credit?

You may file an amended 2008 tax return with a 1040X form. You should consult with a tax advisor to ensure you file this return properly to receive the credit.

Do I qualify for the tax credit if I hired a builder to build a home on a lot that I already own?

Yes. A principal home that is built by the home owner is treated by the tax code as having been "purchased" on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after January 1, 2009 and before December 1, 2009.

However, for new homes bought from a home builder, eligibility for the tax credit is determined by the closing date.

Contact us today for more information on how to qualify.