2009 First Time Home Buyer Tax Credit
Are you a first time home buyer thinking about buying Columbus Ohio real estate? I don’t think there could be a better time to buy Columbus Ohio real estate. It’s still a buyer’s market – but only if you buy, of course. You can find many good deals on real estate in Columbus and throughout Central Ohio suburbs. Plus, if you’re a first time home buyer interested in buying your fist home or condo in the Columbus Ohio area, you can take advantage of the $8,000 federal tax credit for first time home buyers who buy a home between January 1 and December 1, 2009.
In addition, mortgage interest rates are at all time historical lows. I spoke with Sue Reichard, a Mortgage Loan Specialist with Fifth Third Bank in Columbus Ohio, and mortgage interest rates are around 4.75% for an FHA 30 year fixed mortgage loan. Feel free to call Sue at 614-442-3156 to get your FREE mortgage loan pre-approval before you start looking to buy your home in the Columbus Ohio area.
Here’s some quick Q&A’s to learn more about the 2009 Federal Housing first time home buyer tax credit:
Q: What’s the first time home buyer tax credit incentive for 2009?
A: You can get a tax credit of up to $8,000.00 or 10% of the purchase price of a home. You would need to buy a home for at least $80,000 to get the full $8,000.00 tax credit.
Q: Who is eligible for the first time home buyer tax credit?
A: Anyone who hasn’t had any ownership interest in or owned a home within the last 3 years.
Q: How does the first time home buyer tax credit work?
A. Every dollar of the tax credit reduces income taxes due by a dollar. Credits are claimed on an individual’s income tax return. Based upon your income and exemptions, you would use the calculations required to figure out your total tax due. Once the total tax owed has been computed, tax credits are applied to reduce the total tax bill. As an example, if you owed $8,500.00 toward your taxes the $8,000.00 tax credit would wipe out all but $500.00 of tax due.
Q: What happens if I’m eligible for the first time home buyer tax credit, but my entire income tax liability for the year is less than $8,000.00?
A. The first time home buyer tax credit is considered a “refundable” credit, meaning the IRS would send you a refund check for the difference. As an example, if your tax liability was $2,000.00, you’d get a refund of $6,000.00 from the IRS. Tax payers can determine their tax liability by referring to the tables the IRS prepares each year.
Q: Are there any income restrictions?
A: Yes, the full first time home buyer credit is available for individuals with adjusted gross income of no more than $75,000 ($150,000 if filing a joint return). The credit begins phasing out after those numbers and completely disappears at income levels of $95,000 and $170,000 on a joint return.
Q: What type of property can I buy to qualify for the first time home buyer tax credit?
A: Single family detached home, attached or detached condo or co-ops, townhouse, or any similar type of single family property in the US. You must occupy the property as your principal residence (generally defined at least 50% of the time).
Q: Do I have to repay the 2009 tax credit?
A: There is no repayment penalty as long as you don’t sell the home within 3 years of purchase. If you choose to sell within the first 3 years, the entire amount of the tax credit is due back to the federal government, at the time of the sale (a few exceptions may apply).
Q: When can I get the first time home buyer tax credit?
A: Eligible home buyers who buy a home between January 1 and December 1, 2009, have a choice. You can treat the purchase as if it had occurred on December 31, 2008, and claim the credit on your 2008 tax return that is due on April 15, 2009, to get the tax credit refund this year. If you buy between January 1 and April 15, 2009, you can simply claim the credit on your 2008 return due on April 15. If you buy after April 15, you can extend the 2008 income tax filing as late as October 15, 2009. If you’ve already filed your 2008 tax return, you can file an amended 2008 tax return on form 1040X, to obtain your tax credit refund this year. You also have the choice to wait until your 2009 tax return, due April 15, 2010, to claim the tax credit.
Q: How do I apply for the credit?
A: There isn’t any official pre-purchase authorization, approval or application process. After purchasing your home, you simply claim the tax credit on the IRS form 1040 tax return. The credit will be reflected on a new Form 5405 that will be attached to the 1040. Form 5405 can be found on the irs.gov website.
There has been some speculation that FHA (Federal Housing Administration) may permit lenders to allow first time home buyers to use the $8,000 tax credit as a down payment. As of this date, May 20, 2009, I have not been able to confirm the validity of this, with any of the Columbus Ohio lenders, bankers or mortgage brokers that I work with. Should the Federal Government allow this first time home buyer tax credit to be used as the down payment, I’ll certainly post that information here as soon as I am notified about it because that would certainly make it much easier for many first time home buyers to buy their first home. I have some buyers who are borrowing against a 401k, retirement or investment type account for their down payment, knowing that they can replenish their account, once they get the $8,000 first time home buyer tax credit refund. You can also obtain a gift from a relative for your down payment.
To learn more about the first time home buyer tax credit, visit the irs.gov website or consult your personal tax accountant or adviser.
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