As a REALTOR®, you know the First-time home buyer's tax credit is a great opportunity. It not only will help the buyer tremendously, it will be good for our entire economy if enough people take advantage of it.
It is our responsibility to help buyers understand how it works, what it means to them, and why they've got to "get off the fence" and take advantage of it now.
| Answer these questions: |
Yes |
No |
| Are you married and is your modified adjusted gross income less than $150,000? |
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| Have you and your spouse had NO home ownership in the past three years? |
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| Do you plan to stay in the new home for at least three years? |
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If you answered Yes to all three of these questions, you may be eligible for the $8,000 first-time buyers tax credit.
The reality of the situation about asking the buyer if their modified AGI is less than $150,000 is that they probably won't know. The simple solution is when their gross income is less than $150,000, so will their modified adjusted gross income. If they don't know, they should ask whoever did their income tax return for the answer.
Reasons to Buy NOW
- First-time buyers get up to an $8,000 tax credit that doesn't have to be repaid
- Tax savings, appreciation, and amortization dramatically reduce the monthly cost of ownership
- Selection of homes is excellent giving you a greater opportunity to find the home you want
- Interest rates are lower than they've been in 50 years allowing you a lower cost of ownership
This is a revision of the tax credit first established in 2008. A very important change is that if the home is purchased between January 1, 2009 and December 1, 2009, the tax credit doesn't have to be repaid. However, if the home ceases to be their principal residence within three years of purchase, the tax credit must be completely recaptured. This would include converting the home to rental property.
Many people don't understand the significance between a tax deduction and a tax credit. A tax deduction reduces income subject to tax but a tax credit is a dollar for dollar reduction in tax liability. An $8,000 tax deduction would result in $2,240 tax savings for a 28% taxpayer. Whereas an $8,000 tax credit would result in $8,000 in tax savings for the same 28% taxpayer.
For more information, see Form 5405 available on www.IRS.gov. This information is not intended to substitute for professional tax advice.
Download a FREE Excel spreadsheet to help buyers see why they need to get off the fence.