Here is a basic summary of how the Tax Credit works:
- First-time home buyer tax credit of 10% of the purchase price of the home not to exceed $7,500
- In the case of two or more individuals who are not married, $7,500 is the total credit for all individuals combined
- “Refundable” credit means that if the actual tax liability was, say, $5,000, the purchaser would have the entire $5,000 tax liability wiped out plus they would receive a tax credit refund of $2,500
- Phase out if modified adjusted gross income exceeds $75,000 ($150,000 if married, filing jointly)
- Completely goes away if income reaches $95,000 ($170,000 if married, filing jointly)
- First Time Home Buyer defined as not owning a home within 3 years
- Cannot purchase home from a related person
- Recapture of credit over 15 years (accelerated recapture if the home is sold or ceases to be primary residence
- Applies to purchases made between April 9, 2008 and July 1, 2009
If you would like a detailed breakdown of how this program works, please let me know.
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