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Archive for March, 2009

Spring Is Here!

Tulips are popping up in my New England yard and that means that Spring is here!  I can also tell that the season has begun because my phone is ringing off the hook with First Time Homebuyers!  I am thrilled to see that everyone’s getting on board with the Tax Credit, with the low mortgage rates, and with the wonderful opportunities out there.  

I am hosting a Homebuyer’s Toolkit workshop on Thursday, March 26th, 7-9 p.m. in Arlington, MA.  It’s filling up fast.  I can’t wait to meet everyone and hear what’s on their minds.  It’s an exciting time in real estate!

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FIRST-TIME HOMEBUYER TAX CREDIT 

Calling all first-timers!  Here is a Q&A written and published by the Massachusetts Association of REALTORS regarding YOUR First-Time Homebuyer’s Tax Credit.  Contact me with any questions:

Frequently Asked Questions 

In 2008, Congress enacted a $7500 tax credit designed to be an incentive for first-time homebuyers to purchase a home. The credit was designed as a mechanism to decrease the over-supply of homes for sale. For 2009, Congress has increased the credit to $8000 and made several additional improvements. This revised $8000 tax credit applies to purchases on or after January 1, 2009 and before December 1, 2009. Tax Credits — The Basics 

1. What’s this new homebuyer tax incentive for 2009? 

 

The 2008 $7500, repayable credit is increased to $8000 and the repayment feature is eliminated for 2009 purchasers. Any home that is purchased for $80,000 or more qualifies for the full $8000 amount. If the house costs less than $80,000, the credit will be 10% of the cost. Thus, if an individual purchased a home for $75,000, the credit would be $7500. It is available for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. 

2. Who is eligible? 

 

Only first-time homebuyers are eligible. A person is considered a first-time buyer if he/she has not had any ownership interest in a home in the three years previous to the day of the 2009 purchase. 

3. How does a tax credit work? 

 

Every dollar of a tax credit reduces income taxes by a dollar. Credits are claimed on an individual’s income tax return. Thus, a qualified purchaser would figure out all the income items and exemptions and make all the calculations required to figure out his/her total tax due. Then, once the total tax owed has been computed, tax credits are applied to reduce the total tax bill. So, if before taking any credits on a tax return a person has total tax liability of $9500, an $8000 credit would wipe out all but $1500 of the tax due. ($9,500 – $8000 = $1500) 

4. So what happens if the purchaser is eligible for an $8000 credit but their entire income tax liability for the year is only $6000? 

 

This tax credit is what’s called “refundable” credit. Thus, if the eligible purchaser’s total tax liability was $6000, the IRS would send the purchaser a check for $2000. The refundable amount is the difference

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