Tom Sells Knoxville
Knoxville Area Homes & Land
Expanded Home Buyer - Tax Credit 2009/2010
New legislation has just passed and signed into law on November 6, 2009 to
further stimulate the U.S. Housing market in late 2009 and early 2010.
The First Time Home Buyers Tax Credit up to $8,000 has been extended
until April 30, 2010.
A credit of up to $6,500 has been added to current homeowners purchasing a
replacement new or existing home between November 7, 2009 and April 30, 2010.
This is a great benefit for Home Buyers ! Don't miss out on this fantastic opportunity !
Eligibility:
First time home buyers: Single person who has not owned a primary residence in three years prior to closing.
If married, each person must not have owned a primary residence three years prior
to the purchase.
Amount of Credit:
First time home buyers: Lessor of 10% of the sales price or $8,000. Any purchase over $80,000 gets the full credit.
Current homeowners: Up to $6,500 for married couples, $3,250 for separate filers
Must have consecutively maintained their existing home as their primary residence for
five of the last eight years to be eligible.
The maximum purchase price of the new home may not exceed $800,000.
Must the Credit be paid back?
No repayment for purchases after December 31, 2008 as long as the taxpayer holds the home for three years.
For purchases between April 9, 2008 and December 31, 2008, the $7,500 credit is repaid over
fifteen years or upon sale of the home.
What is a Tax Credit?
Unlike a tax deduction which reduces the taxable income subject to tax, a Tax Credit is real money, a dollar for dollar
reduction in your tax bill.
If you owe the IRS $2,000 and have the full credit of $8,000, you get back $6,000.
If you are entitled to a $1,000 tax refund and have the full credit, you get back $9,000.
Even if the purchaser does not owe taxes they get back $8,000.
What are the income limits for buyers seeking the credit?
For a full credit, a single taxpayer must have a modified adjusted gross income of $125,000 or less, the credit is
phased out completely by $145,000.
Married taxpayers get the full credit if their modified adjusted gross income is $225,000 or less, with the
credit phased out completely at $245,000.
What type of homes qualify?
Single family dwellings, condominium units, townhomes, co-op's, and planned unit developments.
The property must be a primary residence for the homeowner.
Can the taxpayer build the new home?
Yes, as long as it is occupied by the taxpayer before July 1, 2010.
Do Owner Financed Sales Qualify?
If it is a lease purchase, you must exercise your option by April 30, 2010 and take title before July 1, 2010.
Straight owner finance deals where the buyer gets a deed and signs a mortgage with the seller qualify for
the credit, even if it is a 100% seller financed transaction and it is closed by April 30, 2010.
When do I get the money?
A taxpayer who has not filed their 2008 tax return may treat a 2009 purchase as having occured on December 31, 2008,
and get their money in 2009 as part of their 2008 refund.
Most taxpayers who close before December 31, 2009 will get the credit in 2010 when they file their 2009 tax return. The taxpayer is also allowed in 2009 to reduce the federal withholding with their employer and have less money withheld from each paycheck.
Taxpayers who close in 2010 will have the option of claiming the credit on either their 2009 or 2010 return.
Always verify the details and your qualifications with your personal tax advisor.
