|
Click
picture to open new window to NAHB consumers web
site
H.R. 3221, the Housing
and Economic Recovery Act of 2008 — which was passed
by the Congress on July 26 and signed by President
Bush on July 30 — allows first-time home buyers to
take a $7,500 tax credit from the purchase of a
single-family home, townhome or condominium
apartment.
Any home buyer who has
not owned a home during the past three years and is
a U.S. citizen who files taxes is eligible to
participate in this program. (Some home buyers who
are not citizens may also qualify; see #14 in the
next article: Consumer Q & A.)
To qualify, buyers must
actually close on the sale of the home on or after
April 9, 2008 and before July 1, 2009. The original
eligibility period expired in April 2009, but
following a major grassroots campaign from NAHB
members, the period was extended to enable home
builders to include the credit in their sales and
marketing next spring and into the early summer —
the peak home buying season.
The program does have
income limits. Single or head-of-household filers
can claim the full $7,500 credit if their adjusted
gross income (AGI) is less than $75,000. For married
couples filing a joint return, the income limit
doubles to $150,000.
Single or
head-of-household taxpayers who earn between $75,000
and $95,000 are eligible to receive a partial
first-time home buyer tax credit. The same applies
to married couples who earn between $150,000 and
$170,000.
The credit is not
available for single taxpayers whose AGI is greater
than $95,000 and married couples with an AGI
exceeding $170,000.
A refundable credit
means that if a taxpayer pays less than $7,500 in
federal income taxes, the government will write them
a check for the difference. For example, if $5,000
in federal taxes is owed, the taxpayer would pay
nothing and a $2,500 payment would be received from
the IRS. If a qualifying home buyer were owed a
$1,000 tax refund, they would receive $8,500.
Buyers can take the tax
credit on their 2008 or 2009 tax return. Those who
close in 2008 take the credit on their 2008 return.
Buyers in 2009 have the option of taking the credit
on their 2008 or 2009 returns. |
