Jacksonville First Time Home buyer Tax Credit
- An $8,000 tax credit, or 10 percent of your home’s value, whichever is less, is now
available to first-time homebuyers.
- Buyers may not have owned a home for the past three years to qualify as “first time”
buyers.
- You must purchase the house between January 1 and November 30, 2009.
- To qualify, buyers must make less than $75,000 a year (or $150,000 per couple).
The credit begins to phase out for people with income levels of up to $95,000 a year
(or $190,000 for couples).
- You don’t have to repay the credit as long as you remain in your home for at least 36
months after the purchase date.
- The credit is refundable, meaning tax filers see a refund of the full $8,000 even if
their total tax bill was less than that amount.
- You can claim the credit on your 2008 tax return.
- If you take advantage of the $8,000 tax credit and then sell your home or it no
longer remains your principal residence within 36 months of the purchase date, you
will have to pay back the full $8,000.
- If you’re a first-time homebuyer and you purchased your home on or after April 8,
2008, and by Dec. 31, 2008, you do not qualify for the $8,000 first-time
homebuyer’s credit. You can still take the $7,500 tax credit, but you have to pay it
back because it’s a 15-year, interest-free loan from the Internal Revenue Service.
- As with the $7,500 credit, if you sell and your gain is less than the credit, you only
have to repay up to the amount of the gain. If you die before the credit/loan is
repaid, any outstanding amount is forgiven.
- If your status is married filing separately, you can’t get the full $8,000 credit or
$7,500 credit. Instead, you get $4,000 of the $8,000 credit and $3,750 of the
$7,500 credit. People filing as single are eligible for the full credit.
First-Time Homebuyer Tax Credit: Frequently Asked Questions
1. What’s this new homebuyer tax incentive for 2009?
The $7,500 repayable credit introduced in 2008 is increased to $8,000 and the repayment
feature is eliminated for 2009 purchasers. Any home that is purchased for $80,000 or more
qualifies for the full $8,000 amount. If the house costs less than $80,000, the credit will be
10 percent of the cost.
2. Who is eligible?
Only first-time homebuyers are eligible. A person is considered a first-time buyer if he/she
has not had any ownership interest in a home in the three years previous to the day of the
2009 purchase.
3. Is there an income restriction?
Yes. The income restriction is based on the tax filing status the purchaser claims when filing
his/her income tax return. Individuals filing Form 1040 as single (or head of household) are
eligible for the credit if their income is no more than $75,000. Married couples who file a
Joint return may have income of no more than $150,000.
4. Do individuals with incomes higher than the $75,000 or $150,000 limits lose all
the benefit of the credit?
Not always. The credit phases out between $75,000-$95,000 for singles and $150,000-
$170,000 for those married and filing jointly. The closer a buyer comes to the maximum
phase-out amount, the smaller the credit will be. The law provides a formula to gradually
withdraw the credit. Thus, the credit will disappear after an individual’s income reaches
$95,000 (single return) or $170,000 (joint return).
5. Are there restrictions on the location of the property?
Yes. The home must be located in the United States. Property located outside the U.S. is not
eligible for the credit.
6. Are there restrictions related to the financing for the mortgage on the property?
In 2009, most financing arrangements are acceptable and will not affect eligibility for the
credit. Congress eliminated the financing restriction that applied in 2008.
7. How do I apply for the credit?
There is no pre-purchase authorization, application or similar approval process. All eligible
purchasers simply claim the credit on their IRS Form 1040 tax return. The credit will be
reflected on a new Form 5405 that will be attached to the 1040. Form 5405 can be found at
www.irs.gov.
8. So I can’t use the credit amount as part of my down payment?
No. Congress tried hard to devise a mechanism that would make the funds available for
closing costs, but found that pre-funding would require cumbersome processes that would,
in effect, bring the IRS into the purchase and settlement phase of the transaction.
9. What if I purchase later this year but can’t get to settlement before Dec. 1?
The credit is available for purchases before Dec. 1, 2009. A home is considered as
“purchased” when all events have occurred that transfer the title from the seller to the new
purchaser. Thus, closings must occur before Dec. 1, 2009, for purchases to be eligible for
the credit.
10. I know there is no repayment requirement for the $8,000 credit. Will I ever
have to repay any of the credit back to the government?
One situation does require a recapture payment back to the government. If you claim the
credit but then sell the property within 3 years of the date of purchase, you are required to
pay back the full amount of any credit, including any refund you received from it. A few
exceptions apply. Note that this same 3-year recapture rule applies, as well, to the $7,500
credit available for 2008. This provision is designed as an anti-flipping rule.
11. What if I die or get divorced or my property is ruined in a natural disaster
within the 3 years?
The repayment rules are eased for many circumstances. If the homeowner who used the
credit dies within the first three years of ownership, there is no recapture. Special rules
make adjustments for people who sell homes as part of a divorce settlement, as well.
Similarly, adjustments are made in the case of a home that is part of an involuntary
conversion.
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