First Time Home Buyers Get $8000 in NC

With the new programs adopted by the Government, there’s a great “gift” for First Time Homebuyers!

It’s a G-I-F-T from the Government, and unlike the $7500 credit given out in 2008, you do NOT have to pay it back, as long as you are actually going to live there for 3 years!

This makes getting a mortgage so much better!

Here are some of the details!

• The $8000 tax credit or 10% of the home’s purchase price, whichever is less, is available only for first time home buyers (Definition of a “first time home buyer” is a buyer who has not owned a principal residence during the three-year period prior to the purchase)
• There is a $75,000 adjusted gross income limit for tax filers filing as single and $150,000 limit for joint return filers.
• The $8000 tax credit is available only for primary residence purchases.
• The tax credit does not require a repayment in most cases.
  • The tax credit does have a repayment provision if the homeowner does not occupy the property for a minimum of 3 years from the closing date.
• The home buyer must purchase a home between January 1, 2009 and December 1, 2009.  (Remember – this does NOT go through the end of the year!)

The $8000 tax credit is received when you file your tax return.

Frequently Asked Questions:

How do I claim the tax credit? Do I need to complete a form or application?
Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on Line 69 of their 1040 income tax return. No other applications or forms are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests.

I read that the tax credit is “refundable.” What does that mean?

The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.

For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).

For more information on the 2010 Tax Credit click here.

If you have questions about purchasing a home in NC (or refinancing into a lower rate), we would love to help!  Please call Steve and Eleanor Thorne, Mortgage Lenders @ Connect With Us on Facebook, 919-649-5058 x 104