First Time Homebuyer Tax Break

I'm sure by now you have heard of the First Time Home Buyer Tax Break signed by President Bush. But what basically does this mean for you and who is considered a first time buyer? Take a look at this simple break down of the bill. As always, please be sure to talk with your accountant and/or financial advisor to verify your situation before hand.

As of 1/13/09 the credit is this:

Signed by President Bush under Housing Assistance Tax Act 2008

Applies to home purchased after 4/8/08 and before 7/1/09, purchased is defined as closing and exchange of titles.

Taxpayer cannot have owned home in prior three years; if Married Filing Jointly, then neither spouse could have owned jointly/severable in this time period

Max amount of credit is $7500; since a credit much more advantageous than deduction

Ratably phased out for higher wage earners: (Married File Joint Mod Adj. Income 150k-170k; Single: Mod. Adj. Income 75k-95k) If single and income is above 95k or married file joint and above 170k, then ineligible

Credit repaid "interest free" over 15 year recapture period. If home is sold prior to 15 years, then accelerated recapture schedule. If divorce or involuntary conversion, accelerated recapture will not begin. If death, then surviving spouse can elect to skip that year and pick up the next year after death.

Credit will appear on separate line on form 1040; may need to fill out additional required schedule as advised in instructions on 1040 form.

This information was taken from National Association of REALTORS Government Affairs Update. Again, please consult your accountant, financial advisor, or attorney to make sure you are eligible for this program and to verify all details.