New Tax Credit for Home Buyers

Posted on March 2, 2009 | by Denny Oh

Last year the government was giving first time home buyers a $7500 tax credit if they purchased a home.  Now, the federal government is offering $8000(10% of the homes purchase price up to $8K) to first time home buyers and it doesnt have to be repaid!  Being a first time home buyer means that youve either never owned a home before, or you havent owned a primary residence for the last 3 years.

This new law allows first time home buyer who purchase a home between January 1st, 2009 and November 30th, 2009 to get a free tax credit.  Unlike that last bill, this one does not have to be paid back.  Additionally, if you purchased the home in 2009 but want to use the credit on your 2008 tax return, you can, but you can only get the $7500 credit.

Nowif youre buying in California, you actually get a $10,000 credit “ first time buyer, or not.  It does have to be new construction, but homes that were built last year, but havent been occupied still count(i.e., Electra, Icon, Solara Lofts, etc).  This applies to anyone who buys a home between March 1st, 2009 and March 1st of 2010.  And unlike the $8000 credit, you dont have to make less than $75K(or $150K for a couple).  Ive also been told that Californians can apply for both the federal and state credits(assuming they qualify for both). 

Heres the catch thoughthe credit is only available until the $100 million budget is used up.  Home buyers must also live in the home for two years, or they have to pay the state back.  Finally, the credit is divided up into three years.  Also, unlike the federal tax credit, the California tax credit is only available for 2009 and 2010 returns.

If you have any questions, please contact your accountant.  I can try and help, but Ill probably just try and sell you a home!

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