Facts about the 7500 Tax Credit:
- The tax credit is for 10 percent of the purchase price, but not to exceed $7,500. So if you purchased a home that cost $65,000 (65000x.10), you credit would be $6,500, but if you purchase a home that costs $200,000, your tax credit would be $7,500, as it is the maximum credit
- Single family homes, including condos & co-ops, are eligible
- You receive the $7,500 credit on your tax return in the form of a refund, not when you purchase the home. Therefore, if you purchase a home and received the full $7,500 tax credit, and your tax bill for the year was $2,000, you would receive a refund of $5,500.
- The income limit is $75,000 for individuals and $150,000 for a joint return. Above this, the credit begins to phase out in proportion to one’s income.
- Only individuals who have not owned a home as a primary residence in the 3 years previous to the purchase qualify. A primary residence is identified as a home that someone lives in greater than 50 percent of a year. But if you own a home that you rent out in one city, but you have rented a home or apartment in another location for the past 3 years, you may qualify.
- The credit is technically a 15 year interest-free loan, as it must be repaid over a 15 year period, with each yearly payment being just over $500, but no interest is charged. If you sell the home before then, you will have to payback a portion, but the way this is going to take place is not yet for certain. This is a very new idea, so all of the logistics and rules haven’t been worked out yet, so make sure you consult someone who really understands the system, if you think you may sell the home.
- This is on houses purchased on or after April 9, 2008, but before July 1, 2009. This bill passed into law on July 30, 2008, but it has a retroactive effect on those home purched on or after April 9, 2008. So if you purchased a home between April 9, 2008 and July 29, 2008, then the tax credit still applies to you, given you meet the other qualifications.
Please see the links in my previous post for more detailed information. The FAQ sheet is really helpful because it provides more detail and it gives numerous scenarios that may just fit you.
Joseph
August 12, 2008 at 4:56 am |
Joseph:
If I purchased my home on April 3, 2008, can I still qualify? I was confused by your comment “This is on houses purchased after April 9, 2008, but before July 1, 2009. So even if you have already purchased a home before this bill passed, you may still qualify and be able to claim it on your income tax return for the 2008 year. ”
Will you clarify?
August 12, 2008 at 2:46 pm |
Sienna,
I apologize for being unclear in my post, but I think that I can clear it up for you.
President Bush signed this bill into law on July 30, 2008. So although the bill did not actually become a law until that date, it had a retroactive effect on those who purchased a home between April 9, 2008 and July 29, 2008. Therefore, when I said that this may apply to you, even if you had already purchased a home before the bill passed, I was referring to those who purchased a home between April 9, 2008 to July 29, 2008. I was unclear in my post, and I am updating it to avoid future confusion.
Is April 3, 2009 the date that you closed on your home, or is it the date that you went under contact? If you completed all legal transaction related to the purchase of the home before April 9, then, in my understanding, you would not qualify, but I am not a tax accountant or an attorney. I hope this helps, and if I have been unclear again, then please let me know.
Joseph
August 12, 2008 at 3:23 pm |
Does this mean that the purchase agreement has to be drawn up or the deal has to actually close with in these dates? My purchase agreement was drawn up on May 30th however the loan did not actually fund and close until June 2nd. I’m pretty sure I would qualify for the tax credit, but then again I’m not an expert.
August 12, 2008 at 3:35 pm |
Nick,
You are correct is assuming that your home qualifies in regards to the date requirement. As I understand the law, the date the purchase agreement was drafted does not have a bearing as it relates to the time period. The deciding factor is the date the transaction is completed or closed. If the transaction was completed on or after April 9, 2008, but before July 1, 2009, then you have meet the time requirement, but obviously you must meet the other guidelines as well.
Joseph
August 12, 2008 at 5:06 pm |
Will the tax credit be extended to Multi-Unit OWNER OCCUPIED residences?
Let’s say a Duplex that the buyer will live in one unit?
August 12, 2008 at 5:42 pm |
Roger,
Let me begin by saying that I am not a tax accountant, nor am I tax attorney. I have carefully read the actual law, which can be viewed at the following link:
http://www.govtrack.us/congress/billtext.xpd?bill=h110-3221 (you may need to paste it into your address bar) The section you are interested in is Sec. 3011 First-time homebuyer credit.
The First Time Homebuyer Credit section of the Act is contained within Subtitle B–Single Family Housing. This would lead me to believe that the property must be a single-family residence, which a duplex is not. However, within the actual language used to describe the residence, it refers to principal residence, not single family dwellings. So if the subtitle limits the definition of principal residence to only mean Single-Family Dwellings, then I do not think that a duplex would qualify, but if principal residence is not limited by the subtitle of single-family, then it might would qualify.
I know this may be confusing, but it is how I believe there could be different interpretations of the definitions. Unfortunately, the best advice that I can offer is that I’m not sure, and if you are purchasing a duplex counting on this money, then it may be worth calling your tax accountant or attorney about.
Joseph
August 13, 2008 at 2:45 pm |
My income is $120,000.00 for 2007. My wife is not working; therefore no income. If we buy a townhouse with the mortgage loan under my name only, but the title of the house is in my name as well as my wife’s name, will I be qualified for the $7500 tax credit?
Thank you in advance for your answers.
August 13, 2008 at 3:12 pm |
Ty,
The way that I understand the income limit is as follows: The limit for someone filing single on a Form 1040 is 75,000, but if you file jointly, then the income limit is $150,000 (75,000, per spouse). So if you and your wife file jointly, although she isn’t working, then your income would not exceed the limit.
If you file a single return, then you do make too much money, as anything greater than $95,000 on a single return maxes you out. But so long as you and your wife file your taxes jointly in the year that you are applying for the tax credit, and your total income is less than $150,000, you should qualify on the basis of income, but you must meet the other requirements listed in the law, such as this being your first principal residence is the last years and that you are not qualifying for other tax credit benefits through either a bond or certain types of mortgages.
I hope this helps.
Joseph
August 19, 2008 at 12:17 pm |
[...] Quick Facts about the $7,500 Tax Credit [...]
August 30, 2008 at 1:02 pm |
I recently got married. I have owned my town house for the past 4 years. The Town house is in just my name My wife and I will be selling my town house and we will be purchasing a house together. Both our names will be on the new deed but this will be her first time purchasing a home. Would we qualify for the tax credit?
September 11, 2008 at 11:13 am |
David,
As I understand the law, I don’t think that you will qualify, but I am not a tax attorney nor accountant, so you should probably consult one of them. Your disqualification creates the problem. In many states, even though your wife is not on deed, she is still an owner of the property. That would be the case in NC, as I understand the law here. Therefore she would not even qualify on her own, as you hold the property together because of your marriage, regardless of the names on the deed.
For instance, I owned property before I got married. The deed still states that the property is in my name only. It is rental property that my wife knows about, but doesn’t really care about. But before I could sell that property, she would have to sign the transfer deed, even though her name isn’t on the deed. This is known as tenants by entirety. State law varies, however, so this may not be the case in your state.
Joseph
September 15, 2008 at 1:55 am |
[...] from the National Association of Realtors. Also, quick facts about this from Joseph Griffin from Catawba Valley Real Estate Blog is helpful as [...]
September 15, 2008 at 7:52 pm |
Would I qualify for the tax credit if the loan is seller financed or does it need to be a traditional loan?
November 22, 2008 at 11:20 am |
If I buy a two family, owner occupied. Will I be eligable? (I am a first time homebuyer).
January 1, 2009 at 6:27 pm |
Edward,
My understanding is that the legislation applies to single-family dwellings, including condos, townhomes, and co-ops. I do not think that it would apply to a duplex type property, but you would want to verify that with your accountant.
Joseph
December 22, 2008 at 8:19 pm |
i bought a house in march of 2007 do i qualify all this is to confusing for me.
January 1, 2009 at 6:21 pm |
Joseph,
Based upon the date requirements of the purchase, it does not appear that you purchased a home within the allowable window.
Joe
January 11, 2009 at 11:16 pm |
I purchased a house in June 2008, I was single at the time and the home is only in my name. Since then I have got married. How do I file so I get the tax credit because my husband has previous tax debts in which I do not want my first time home buyers credit going towards his debt? Thank you.
February 3, 2009 at 11:10 am |
I think the simplest thing to do is to file separately. You aren’t required to file as a married couple. If you do file separately, then you will only be able to receive half of the tax credit ($3,750). Talk to your accountant and see if that wouldn’t be possible, but I think it should. Joseph
January 16, 2009 at 9:37 am |
I bought a home on April 1st 2008. Do I still qualify to get to tax credit even though it was 8 days before the date?
February 3, 2009 at 11:09 am |
Jack,
It depends. If you purchased the home on April 1st, but did not move into the home after the date, then you may have a case. For instance, with new construction, the key date isn’t when the contract is signed, but when the owner begins occupying the home. Even if it wasn’t new construction, but you did not move into the home until on or after April 9, 2008, you may have a case, but I am not certain. You should check with a CPA about this or a tax attorney.
Joseph
February 4, 2009 at 12:12 pm |
I purchased my home on April 4th of 2008. That was the closing date. I bought it while the home was in the middle of a renters lease, and I honored the last four months of the renters lease. I moved into the house on 8/22/08. It is my primary residence. Under all of the other qualifications I would be eligible. Does anyone think I could be eligible under the time table? I haven’t found any info about the occupancy rule. I own my own business so this would greatly help with my taxes this year!
February 4, 2009 at 12:57 pm |
Kerri,
I don’t think so, but I could be wrong. If you look at the instructions of Form 5405, which is the one used to file for the credit, it states
“Enter the date you acquired the home. This is the
date you purchased it (or the date you first occupied it if
you constructed your main home).”
Therefore, if the home is not new construction, then it would appear that the key date is not the date you moved in, but the date that you acquired the home.
But since you could not move in because of the lease, I could see the argument that this home was not your principal residence until you were able to move in, but the issue does not seem to be when the home became your principal residence, but when you acquired the home. I can definitely understand your desire to get this credit as a small business owner, so I would check with a competent tax professional, such as a CPA or a Tax Attorney to get a definite answer.
Joseph
February 7, 2009 at 12:11 pm |
I was wondering if this will would in calif we are trying to buy a house and could use the help
February 9, 2009 at 10:52 am |
Terry,
If your question regards this tax credits application in California, then, yes, it should be qualify for homes purchased in California, as it is part of the Federal Tax Code. Joe
February 11, 2009 at 3:50 pm |
A few questions
1. We are in the contract process of a buying a house, with the seller financing it. Would we be able to qualify for the tax credit seeing as it’s not bank financed?
2. We already filed (and received the refund) for 2008…is there a way to ADD this to this to 2008’s taxes so that we can receive the credit this year instead of next?
Thanks
February 18, 2009 at 12:20 am |
Wendy,
I think that you should qualify so long as you are not having the home financed to you by a family member or the like. You need to check with your accountant to make certain that it meets the guidelines of the bill. In regards to your second question, yes you can still amend your tax return and receive the additional credit. Joe