Diane Ragsda…, Real Estate Pro in Virginia Beach, VA

What is the Tax Credit all about?

Asked by Diane Ragsdale, Virginia Beach, VA Wed Mar 4, 2009

First-time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and before December 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner.

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I don't see how getting to write off up to $8,000 in taxes is going to spur any sales. If property values keep dropping even slowly, the tax credit benefit would be instantly wiped out by the loss of equity. It's just a bonus for those who were buying anyway.

Lets look at an example: Any house in our area will be $80K+, so the full tax credit will apply.

April 15. 2010 rolls around, a couple with 2 children (married filing jointly) has gross income of about $120K and AGI of about $80K and a federal tax liability of $6,800. You apply the tax credit which is greater than the tax liability and you get a refund of $6,800. A little while later you get a tax refund check for $6,800.

How on earth is this helping housing? Most people need the downpayment, not a tax refund.

What it will do is stimulate spending in 2010 when people get the refunds. So much for any quick fixes.
0 votes Thank Flag Link Thu Mar 5, 2009
The great news here for first time homebuyers (meaning you have not had ownership in a primary residence for the past three years) is that the $8,000 tax credit is not just a tax deduction! It is a true dollar for dollar reduction on taxes owed and can result in a true tax refund! The even better news is that if you own the home for three years or more the tax credit does not have to paid back! Single taxpayers with an Adjusted Gross Income (AGI) up to $75,000 and married taxpayers with a joint AGI up to $150,000 are eligible. A lesser tax credit may still be available if your income is above those amounts.

With home inventory at such a high level this is an even greater incentive for first time home buyers to start shopping today!
0 votes Thank Flag Link Wed Mar 4, 2009
Great News for First Time Home Buyers:

The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.

The tax credit does not have to be repaid,

Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.

Nelene Gibbs, Realtor, e-Pro
William E. Wood & Associates
757 672-3232
Web Reference: http://www.nelenegibbs.com
0 votes Thank Flag Link Wed Mar 4, 2009
First-time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and before December 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner.
0 votes Thank Flag Link Wed Mar 4, 2009
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