American Recovery and Reinvestment Act of 2009

WHO IS ELIGIBLE?

A tax credit of up to $8,000 is available for first-time home buyers purchasing on or after January 1, 2009 and on or before April 30, 2009. In cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.

A tax credit of up to $6,500 is available for repeat home buyers who have owned a home for five consecutive years out of the prior eight years. The repeat home buyer tax credit applies to houses sold after November 6, 2009 and on or before April 30, 2010. In cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.

REFUNDABLE TAX CREDIT

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 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).

INCOME RESTRICTIONS

Income limits of $125,000 for individuals and $225,000 for married couples filing jointly apply to all sales occurring after Nov. 6, 2009. The income limits for sales occurring on or after January 1, 2009 and on or before November 6, 2009 are $75,000 for individual taxpayers and $150,000 for married couples filing jointly.

HOMES THAT QUALIFY

All homes—resales and new single-family, townhomes and condominiums—qualify provided that the home will be used as a principal residence and the buyer has not owned a home in the prior three years.

READY TO LEARN MORE?

To find out the latest information about the first-time home buyer’s tax credit, please contact your local Saussy Burbank new home sales consultant.

SOURCE: National Association of Home Builders (www.federalhousingtaxcredit.com)

*The information contained herein should not be used in any actual transaction without the advice and guidance of a professional Tax Advisor who is familiar with all the relevant facts. The information contained here is General in nature and is not intended as legal, tax or investment advice. Furthermore, the information contained herein may not be applicable to or suitable for the individuals’ specific circumstances or needs and may require consideration of other matters. Saussy Burbank assumes no obligation to inform any person of any changes in the tax law or other factors that could affect the information contained herein.