First-time Buyers

April 30, 2009

First-time Buyers of Corinth, MS homes get up to $8,000 back!

The Senate and House passed a new bill on February 13th!!!  The President is expected to sign it this week.  It was part of the new stimulus bill the “American Recovery and Reinvestment Act of 2009″ which improves the Federal Tax Credit to first-time homebuyers that I posted about a few weeks back.  I definitely am not a supporter of everything in the stimulus package, but this tax credit back to first-time homebuyers is very beneficial and is much needed for helping people buy their first home in Corinth, MS.  What exactly are the terms with this tax credit you ask?  Here are the basics:

  1. The best change is that it is NON-REFUNDABLE!!!  The previous credit back in 2008 had to be repaid over 15 years.  The new one is basically a gift!!!!  It does not have to be repaid AS LONG AS you do not sell the house within the first 3 years of purchasing it.  If you do sell in those first 3 years, you have to repay the full amount of the credit upon sell of the house.
  2. The first-time home buyer will receive up to a maximum of $8,000.00 back on your income tax return withholdings or as a credit against additional tax you owe to the IRS.  The amount of credit received is based on 10% of the purchase price of the home up to a maximum of $8,000.00.  If you do not owe $8,000, then the balance of the credit will be refunded to the home buyer.
  3. The first-time home buyer requirement means that neither the buyer or spouse can have owned a principle residence within the last 3 years of the purchase date to qualify.  So you actually can have owned a home before, just not within the last 3 years.
  4. There are income limitations of the buyer.  A single person must make less than $75,000 to get the full credit and phases out between $75,000 -$95,000.  A married couple filing jointly must make less than $150,000 to get the full credit and it phases out between $150,000 – $170,000.
  5. The purchase must be for a princple residence only.  Does not apply to rental or investment property or second homes.
  6. The real estate purchase must have been made between Jan 1, 2009 and December 1, 2009 to apply.

(Check with your tax preparer for more details.)

For Example, a new home owner in Corinth, MS buys an $85,000 home and gets 10% of that purchase price as a federal tax credit (not to exceed $8,000).  So in this case, the buyer would get a $8,000 credit as 10% of the purchase price would have been $8,500 which exceeds the limit.  Let’s say this home buyer owes the IRS $10,000 for 2009 taxes, so the credit would reduce the amount owed to the IRS to $2,000  ($10,000 owed-$8,000 credit= $2,000 owed).  If the home buyer had only owed the IRS $5,500 then the buyer would have received a refund from the IRS for the additional $2,500 ($5,500 owed -$8,000 credit= $2,500 refunded).

If you bought a $60,000 home in Corinth, MS or Alcorn County then you would be eligible for $6,000.00 ($60,000 x 10%) as a reduction of your taxes or refund from the IRS.

Basically, this will save you up to a maximum of $8,000 in 2009 through either a reduction of the amount you pay in or a refund back to you from Uncle Sam!!!  In net terms, your $80,000 home purchase was really for only $72,000!!!!!  Man, I wish I was a first-time home buyer!!!!!

See the link below for a detail chart from the National Association of Realtors:

http://www.realtor.org/wps/wcm/connect/b32db1004d05f6338052c5fd73e5610f/government_affairs_tax_credit_chart_021308.pdf?MOD=AJPERES&CACHEID=b32db1004d05f6338052c5fd73e5610f

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Written by djumper · Filed Under Real Estate Blog