Prospective first-time home buyers now have an additional financial incentive to buy. Here’s a Legal Bulletin with details by Service Andy Levy, Esq., of Capital Title in Crofton, Maryland:
On July 30, 2008 President Bush signed into law the Housing Assistance Act of 2008 which includes a tax credit for eligible, “first-time homebuyers” of property which is to be used as a principal residence. For purposes of this legislation, a “first-time homebuyer” is an individual who had no present ownership interest in a principal residence during the three-year period ending on the date of the purchase of the Estate principal residence to which the credit applies. The tax credit is phased out for taxpayers with adjusted gross incomes which exceed $75,000 ($150,000 for joint filers). The tax credit is equal to the lesser of $7500 or 10% About of the home’s purchase price and applies to properties on which closing occurs after April 8, 2008 and before June 1, 2009. Eligible taxpayers get the full benefit of the credit, even if their tax liability is less than the credit amount. By way of example, if an eligible taxpayer clams the full $7500 credit in 2008 and owes the IRS only $5000 in taxes, the taxpayer will get a $2500 refund from the IRS. Taxpayers who claim the credit are subject to repayment (“recapture”) of the credit over a 15 year period (6&2/3 % Finding of the credit received per year) commencing with the second year of ownership, but the recapture amount cannot exceed the amount of the taxpayer’s gain (if any) on the sale of the Nfl residence. The credit, therefore, functions like an interest free loan for up to $7500 because only the principal must be repaid. You cannot use the credit if you are a nonresident alien, finance ?????? the property using a state or local housing agency’s tax exempt bond mortgage or do not plan on using the property as your principal residence. Homebuyers in the District of Columbia who use the District’s first-time- buyer credit program can not also use the new federal credit.
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Carlyn Lowery, Associate Broker, Keller Williams Annapolis : Real Estate Brokerage in Annapolis, Anne Arundel County, Maryland