I dove into the Stimulus Plan on the House Appropriations website to try and find out what kind of agreement the Senate and House of Representatives came to regarding the First Time Home buyers Tax Credit. Not the most fun reading, but extremely important to know about for any serious real estate professional.
- the tax credit phases out for individual tax payers you have a modified gross income of $75,000 to $95,000 ($150,000-$170,000 for joint filers)
- tax payers can claim the purchase of a home on their 2008 tax return (thus the reason for the credit beginning on December 31, 2008), even if they buy their home, for example in January of 2009
- extends the current home buyer tax credit for qualifying home purchases to December 1, 2009
- increases the maximum credit to $8000 ($4000 for a married person, filing separately)
- waives the recapture of this tax credit for homes bought between December 31, 2008 to December 1, 2009
- if the home is sold, or ceases to be the primary residence, within 36 months of the closed date, then the rules of recapturing the tax credit apply (currently over a time period of 15 years)
The part that really stinks about the revisions is for the first time home buyers who closed on their home between April 9, 2008 -December 30, 2008. It appears they will still need to repay the tax credit of $7500 over a period of 15 years, just as originally written, and none of the new revisions will apply to them.
Don’t worry though, at least you get a tax credit. We closed on your new home in March 2008, and even though we are only 30 days out for qualifying, no soup for us!