First-Time Homebuyer Tax Credit

Portland has a great number of homes in the Bungalow Style.

Despite the efforts of Realtors and mortgage brokers who advertise it constantly, many people still don’t know about the First-Time Homebuyer Tax Credit. The American Recovery and Reinvestment Act allows first-time homebuyers, or those who have not owned a home in the past three years, to take advantage of this tax credit.  The credit is 10% of the purchase price of the home up to a maximum of $8000.  Since most houses in Portland cost at least $150,000, it’s easy to receive the entire $8000.  (i.e., 10% of $150,000 is $15,000.  That’s over the maximum allowed, so the IRS would send $8000). Even an $80,000 condo would qualify for the full $8000!  Here are the basics:

1. Effective on home purchases on or after January 1, 2009 and before December 1, 2009.  In other words, you need to plan now so you don’t run out of time.
2. Any single-family residence including condos, co-ops or townhomes are eligible.
3. Purchasers will receive a refund on their taxes less any taxes owed.  In other words, if you owe the IRS $2125 in taxes for 2009 and you are eligible for the entire $8000, the IRS will send you a check for $5875.  If you don’t owe any taxes or the IRS owes you, then you’ll receive your regular refund plus $8000.  Not bad!
4. Income limits are:  full amount of the credit is available with adjusted gross income of no more than $75,000 for an individual or $150,000 for a joint return. The credit phases out above those caps at $95,000 and $170,000 respectively.
5. If you sell the home within three years of the purchase, the entire amount of the tax credit will be recaptured on the sale.  So, plan to stay in your new home at least 3 years and one day!

I can’t begin to tell you what a wonderful opportunity this is!  Call me and we’ll get started finding your first home!