Q: I heard some information about first time home buyers receiving a $7,500 tax break. Can you please inform me, as I am a first time buyer? Thanks.
A: If you blinked, you probably missed the $7,500 first-time home buyer tax credit (10 percent of the purchase price up to $75,000). Good for first-time buyers (defined as someone who has never before purchased a home or who hasn’t owned one in three years) who purchase a primary residence from April 2008 through June 2009, the tax credit is a dollar for dollar reduction in the taxes you pay, so it’s much more valuable than a deduction.
The bad news about the $7,500 tax credit is that it was more like a zero interest loan because it required that you pay it back in $500 increments over 15 years.
The good news is that Congress has recently decided that everyone who buys should get not just a $7,500 tax credit, but up to a $15,000 tax credit. The credit is structured as 10 percent of the purchase price up to $150,000. And, the repayment requirement has been eliminated as long as you live in your house for at least two years.
The $15,000 tax credit will be good on homes purchased for a year from the date that the tax credit implemented. It will replace the $7,500 tax credit, so if you bought a home after April 2008, you should qualify.
The tax credit will come to you after you file your tax return, but there’s talk that you’ll be able to amend your 2008 return to reflect an applicable home purchase. As I was writing this, the details were being hammered out. Watch the ThinkGlink.com/blog for more details.
Jan. 19, 2009.