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June 16, 2009 |
First-Time Homebuyers Can Use Tax Credit for Closing Costs |
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It's a good time to be a first-time homebuyer, thanks to attractive loan programs and a generous $8,000 income tax credit.
Recently, the tax credit was loaded with new angles allowing first-time buyers all or part of the down payment, a stumbling block for about 50% of all first-time buyers.
As of May 29th, the $8,000 federal tax credit can be used as "the down payment or closing costs" for buyers who apply for mortgages insured by the Federal Housing Administration (FHA) before Dec. 1st, 2009.
A first-time buyer, as defined by the IRS, is anyone who has not owned a principal residence for three years prior to the purchase. For married taxpayers, the law test the home-ownership history of both the homebuyer and his or her spouse.
According to Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, the idea to "monetize" the tax credits allows them to be immediately turned into cash, rather than waiting several months after the closing date of the transaction for the credits to be processed.
There are income limits attached to the $8,000 first-time credit. A phase-out of the credit begins when the taxpayer's income exceeds $75,000, or $150,000 if married and filing jointly. The credit is eliminated completely when the taxpayer's income reaches $95,000 or $170,000 if married filing jointly.
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April 2, 2009 |
New Website for Residents - NatureWalkConnect.com |
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February 17, 2009 |
New $8,000 Tax Credit for Eligible Buyers |
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Home Buyer Tax Credit at a Glance
- The tax credit is for first-time home buyers (or home buyers that haven't owned a home in the past 3 years)
- The tax credit does not have to be repaid (unlike the tax credit enacted in 2008)
- The tax credit is equal to 10% of the home's purchase price up to a maximum of $8,000
- The tax credit is available for homes purchased between January 1, 2009 and December 1, 2009
- The tax credit applies to single taxpayers with incomes under $75,000 and couples with incomes under $150,000 (if your income exceeds these levels, you may still be eligible for a partial tax credit)
Opportunity to Use Tax Credit At Closing
The new law also allows state housing finance agencies to help home buyers at closing by advancing the credit as a loan.
More Information
More details are available at the Federal Housing Tax Credit website.
Here's a quick list of some of the other online resources available for home buyers:
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