| You might have heard about the $8,000 tax credit first | | | | Finally, there are income limitations on receiving the tax |
| time home buyers could receive. Have you heard that | | | | credit. Single taxpayers earning under $75,000 can |
| you can apply it towards the purchase of your new | | | | receive the full tax credit. Phaseouts of the tax credit |
| home? On May 29, 2009, the secretary of the U.S. | | | | begin above this amount. Above $95,000, you can no |
| Housing and Urban Development agency (HUD) | | | | longer receive the tax credit. For those filing as |
| announced two new ways that you can receive this | | | | Married-Filing Jointly, you can receive the full benefit as |
| tax credit. | | | | long as your joint income does not exceed $150,000. |
| If you use an FHA-approved lender, you can use the | | | | Phaseouts begin above this amount to $170,000. |
| tax credit towards the down payment and closing | | | | How Much Can You Receive? |
| costs of the home. While your tax credit can be used | | | | Qualified buyers can receive 10% of the purchase |
| for a substantial part of the down payment, FHA still | | | | price of the home up to $8,000. Thus in order to |
| requires that you put up 3.5% of your own money. | | | | receive the full benefit, your residence must cost at |
| Mortgages obtained through state Housing Finance | | | | least $80,000. Those purchasing residences above this |
| agencies and other certain non-profit organizations can | | | | amount cannot receive more. |
| monetize the tax credit, reducing the amount of your | | | | What If? |
| mortgage. Whichever option you use, the bottom line | | | | What if you are not using an FHA-approved lender or |
| will be a smaller mortgage and lower monthly | | | | obtaining your mortgage through an approved |
| payments. | | | | agency? There are still ways to receive your tax |
| Who Qualifies? | | | | credit sooner, rather than later. |
| The tax credit is not available to everyone. To be | | | | If you did not yet file your 2008 taxes, instead |
| eligible, you must be considered a first-time home | | | | requesting an extension, you can include the purchase, |
| owner, you must purchase the property this year and | | | | even if it occurred in 2009, on your 2008. tax return. If |
| you cannot exceed the income limitations. | | | | you have already filed your 2008 tax return, you can |
| To be qualified as a first-time home owner, you or | | | | amend it and receive the credit now instead of next |
| your spouse must not have owned a home three | | | | year. |
| years prior to the purchase of the new home. The | | | | Consider taking the credit through lower deductions |
| property you purchase must be used as your primary | | | | from your paycheck. Discuss this option with your |
| residence. You cannot buy a rental property. You can | | | | human resources manager. If you expect your tax bill |
| choose a single-family dwelling, a condominium, a | | | | to be $8,000 less next year, add a sufficient number |
| townhouse or a co-op property. All qualify. | | | | of extra exemptions on your W-4 form so that less |
| The residence must be purchased by December 1, | | | | taxes are taken out. Since you are a first-time home |
| 2009. Since closing on a property can take months, if | | | | buyer, don't forget to take into consideration additional |
| you are thinking about taking advantage of this credit, | | | | tax reductions you might receive due to mortgage |
| don't procrastinate, rushing through the closing process | | | | interest, property taxes and other Schedule A |
| could result in costly mistakes. The credit you receive | | | | deductions you might now be able to receive. |
| does not have to be repaid as long as you maintain | | | | Be sure to review this and other tax concepts with |
| the home as your primary residence for three years. If | | | | your professional tax adviser prior to implementing |
| you sell the residence before three years, the credit | | | | them. |
| will be deducted from the sales price. | | | | |