Federal Home Buyer Tax Credit Information | Clarksville TN Real Estate

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What an incredible opportunity for home buyers!

On November 6, 2009, President Obama signed into law a revised and extended stimulus package which includes a provision for first time home buyers as well as current home owners.

In addition to a huge selection of homes to choose from, and near-record low interest rates on solid, 30-year fixed rate mortgages, and far more affordable prices, homebuyers now have the added incentive of a $8,000 federal income tax credit for first-time buyers and a $6,500 federal income tax credit for homeowners to help them buy their dream home!

What changes have been made to the tax credit? There are three main changes; the deadline has been extended, the tax credit is available to long-time homeowners, and the income limits have been increased so that the credit is also available to people with a higher income than before.

Here are some questions and answers that will help you determine if you are eligible:

What is the Home Buyer Tax Credit?
On July 30, 2008, a major housing bill (H.R. 3221) was signed into law. The law created a new, temporary tax credit equal to ten percent of the qualified home purchase price, with a maximum credit of $7,500. In February 2009, with the passage of The American Recovery and Reinvestment Act the maximum credit is increased to $8,000 and the repayment of the credit is no longer required for home purchases on or after January 1, 2009 and before December 1, 2009. Then on November 6, 2009 this was revised to extend the deadline through June 30, 2010. The new credit also opens up tax benefits for current homeowners who are purchasing a new principal residence.

Who is eligible?
A first time home buyer is defined as a buyer who is a U.S. citizen who files a tax return and who has not owned a principal residence in the previous 3 years. The eligible property includes any single family home that can be used as a principal residence including a condominium. To qualify the buyer must close on the sale of the home between January 1, 2009 and before December 1, 2009.
A long-time homeowner is defined as someone who has lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the replacement home is purchased. These homeowners must be purchasing a replacement primary residence, or home, not a second home.

Federal Tax Credit Extended Clarksville TN

Are there income limits?
Yes. The income limit for single taxpayers is $125,000; the limit is $225,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) above those limits. The phaseout range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $145,000 (single) or $245,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

When will I receive the credit?
The credit reduces your income tax liability for the year in which you purchase the home. First time home buyers who close on their new home on or after January 1, 2009 and before June 30, 2010 will receive the tax credit when they file their 2009 tax return in 2010. The credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. In such instances, the taxpayer will receive a refund check from the government.

How is the tax credit repaid?
With the passage of The American Recovery and Reinvestment Act there is no repayment for purchases on or after January 1, 2009 and before June 30,2010.

What if I sell the home?
If the homeowner sells the home within three years of purchase, the entire amount of the credit would be recaptured at the time of the home sale.

Click here for the Tax Credit FAQ PDF for more information.

Featured Blog: Five Tips for First Time Homebuyers

The Clarksville, TN real estate market consists of 54,000 single family homes and over 2,000 condos and town homes. Ft. Campbell real estate is affordable to most military ranks and located mostly on the north side of Clarksville. To learn more about Ft. Campbell properties, click here.