Homebuyer Tax Credit Explained
AMOUNT OF CREDIT - Lesser of 10 percent of the purchase price or $8000.
REPAYMENT - No repayment is required, unless the home is sold within 3 years. In that case the entire credit will be recaptured when the home is sold.
REFUNDABLILITY - Purchasers will receive refund for unused credit when tax return is filed. If you file an amended 2008 tax return you can get the refund now rather than waiting until after you file your 2009 tax return.
ELIGIBLE PROPERTIES - Any single family principal residence, including condos, co-ops, townhouses. The exception is if you purchase the home from a “close” relative (as defined by the IRS) or from a business you own - in those cases the tax credit is not available.
ELIGIBLE HOMEBUYERS - Purchaser may not have owned a principal residence in 3 years previous to purchase. If you have a co-borrower that has owned in the past 3 years:
Can get the credit: if you are living together but not married; if your parents/guardians co-sign but are not on the title, and you are not claimed as a dependent on their taxes.
Cannot get the credit: if you are married and one of you has owned in the past 3 years; if your parents/guardians co-sign, are on the title, and claim you as a dependent on their taxes.
PURCHASE DEADLINE - You must close on your home on or before November 30, 2009.
INCOME LIMITS - Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 for joint filers). Reduced credit is available for individuals with incomes up to $95,000 ($170,000 for joint filers), and the credit phases out entirely for higher incomes.
DOWNPAYMENTS - The tax credit is not available for use as a down payment unless you finance with CHFA and use their JumpStart program - so far they are the only state housing finance agency to create a program that takes advantage of the new FHA regulations allowing use of the tax credit towards the down payment and/or closing costs.