Real Estate
2008/2009 Homebuyers Tax Credits
Contributed by Susanne Horvath
Century 21 Homestar, Conneaut
There’s currently much confusion about the 2008 and the 2009 homebuyers’ tax credits. They are two separate and very different credits.
Both credits apply to first-time home buyers, meaning anyone (including a spouse) who hasn’t owned a home during the prior three years.
Both credits have income restrictions. The credits phase out as income rises from $75,000 to $95,000 on single returns and from $150,000 to $170,000 on joint returns.
That's just about where the similarities end.
The $7,500 tax credit was enacted by Congress in 2008 as an incentive for first-time homebuyers and was designed to decrease the over-abundance of homes on the market. Homes purchased between April 9, 2008 and December 31, 2008 qualify for a $7,500 credit that really isn’t a credit at all! Taxpayers who claim this credit have to repay the entire amount by adding $500 to their tax bills every year for 15 years, beginning in 2010. It is more like an interest-free loan.
An increased tax credit of $8,000 was enacted in 2009. This revised credit relates to purchases made on or after January 1, 2009, but prior to December 1, 2009. Folks who purchase their homes between January 1, 2009 and November 30, 2009, get an $8,000 credit that really is a credit! It is never paid back!
Why two similar programs so close together? As the economy worsened, Congress decided to add more incentive to jump-start the housing market, but realized no benefit in making the new, sweeter deal retroactive.
Once your home purchase is complete, apply for the tax credit as quickly as possible. The $8,000 check from the IRS is certain to come in handy!
For further information, contact Susanne Horvath with Century 21 HomeStar at the office (440-599-9145) or on the cell (440-319-9146).
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