I’m fortunate to know and work with some of the best lenders in the industry. Michelle Coolidge, of Cobalt Mortgage forwarded this summary of the First Time Home Buyer Tax Credit and I wanted to share it with those who have questions. Both Michelle and I are happy to answer any questions you may have about becoming a first time homeowner. There’s definitely a great selection of homes to choose from in the area!
FIRST-TIME HOMEBUYER TAX CREDIT
As Modified in the American Recovery and Reinvestment Act
Major Modifications Italicized
February 2009
| FEATURE | CREDIT AS CREATED JULY 2008
APPLIES TO ALL QUALIFIED PURCHASES ON OR AFTER APRIL 9, 2008 |
REVISED CREDIT –
EFFECTIVE FOR PURCHASES ON OR AFTER JANUARY 1, 2009 AND BEFORE DECEMBER 1, 2009 |
| Amount of Credit | Lesser of 10 percent of cost of home or $7500 | Maximum credit amount increased to $8000 |
| Eligible Property | Any single family residence (including condos, co-ops, townhouses) that will be used as a principal residence. | No change
All principal residences eligible. |
| Refundable | Yes. Reduces (or can eliminate) income tax liability for the year of purchase. Any unused amount of tax credit refunded to purchaser. | No change
Purchasers will continue to receive refund for unused amount when tax return is filed. |
| Income Limit | Yes. Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000). | No change
Same income limits continue to apply. |
| First-time Homebuyer Only | Yes. Purchaser (and purchaser’s spouse) may not have owned a principal residence in 3 years previous to purchase. | No change
Still available for first-time purchasers only. Three-year rule continues to apply. |
| Revenue Bond Financing | No credit allowed if home financed with state/local bond funding. | Purchasers who utilize revenue bond financing can use credit. |
| Repayment | Yes. Portion (6.67% of credit or $500) to be repaid each year for 15 years, starting with 2010 tax filing. | No repayment for purchases on or after January 1, 2009 and before December 1, 2009 |
| Recapture | If home sold before 15-year repayment period ends, then outstanding balance of repayment amount recaptured on sale. | If home is sold within three years of purchase, entire amount of credit is recaptured on sale. Applies only to homes purchased in 2009. |
| Termination | July 1, 2009
(But note program changes for 2009) |
December 1, 2009 |
| Effective Date | Purchases on or after April 9, 2008 and before January 1, 2009. Repayment to begin for 2010 tax year. | All revisions are effective as of January 1, 2009 |
Information courtesy of:
Michelle Coolidge | Cobalt Mortgage
Certified Mortgage Planner
Office: 206.631.2205 |Cell: 206.909.3930
Fax: 877.900.5102
