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The new Housing Bailout
Bill is a "tax credit"
that will be granted to first time home
buyers who purchase a home between April
9th, 2008 and June 30th, 2009. This is actually
a interest free loan granted by the Internal
Revenue Service to be paid back, interest
free, over a 15 year period, beginning
in the 2nd taxable year after the (taxable)
year the home was purchased. Below are some
facts about the tax credit.
We would appreciate your opinion about this
"first time homebuyer tax credit"
on the form below. Please let us know what
you think! Thank you!
Who
is Eligible
• The $7,500
tax credit is available for first-time home
buyers only.
• The law defines a first-time
home buyer as a buyer who has not owned
a home during the past three years.
• All U.S. citizens who file
taxes are eligible to participate in the
program.
Income Limits
• Home buyers who file as single
or head-of-household taxpayers 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.
• Married couples who earn
between $150,000 and $170,000 are eligible
to receive a
partial first-time home buyer tax credit.
• The credit is not available
for single taxpayers whose AGI is greater
than $95,000 and married couples with an
AGI that exceeds $170,000.
Effective Dates for the Tax Credit
• First-time home buyers would
receive a $7,500 tax credit for the purchase
of any home on or after April 9, 2008 and
before July 1, 2009. To qualify, you must
actually close on the sale of the home during
this period.
Tax Credit is Refundable
• A refundable credit means
that if you pay less than $7,500 in federal
income taxes, then the government will write
you a check for the difference.
• For example, if you owe $5,000
in federal income taxes, you would pay nothing
to the IRS and receive a $2,500 payment
from the government.
• If you are due to receive a $1,000
tax refund from the government, your refund
would grow to $8,750 ($1,000 plus $7,500
from the home buyer tax credit).
•
Buyers can take the tax credit in their
2008 or 2009 tax return.
• If you purchased the home in 2008,
the tax credit is taken on your 2008 tax
return. If you buy in 2009, you have the
option of taking the credit on your 2008
or 2009 tax returns.
Types of Homes that Qualify for
the Tax Credit
• All homes, whether single-family,
townhomes or condominium apartments will
qualify, provided that the home will be
used as a principal residence and the buyer
has not owned a home in the prior three
years. This also includes newly-constructed
homes.
Payback Provisions
• The tax credit essentially serves
as an interest-free loan to be repaid over
15 years.
• For example, a home buyer claiming
a $7,500 credit would repay the credit at
$500 per year. If the home owner sold the
home, then the remaining credit would be
due from the profit of the home sale.
• If there was insufficient profit,
then the remaining credit payback would
be forgiven.
Please
give us your thoughts on the 'Housing Bailout
Bill' in the form below. Thanks!
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