Virginia with Cobalt mortgage has teamed up with a few Real Estate professionals to present seminars/classes on how you can benefit from the $8,000 First-Time Homebuyer Tax Credit before the opportunity expires as we approach the end of the year. Basically, this tax credit is for first-time homebuyers only, and does not have to be repaid. The credit was made to help fuel home sales during the economic crisis, and it’s very apparent the market has picked up. Therefore, we’ve yet to hear any news saying the credit will be extended after it’s expiration date of December 1st, 2009.
Originally, the incentive was $7,500 in 2008, but 2009 purchasers have been handed the chance to take advantage of the credit for $500 more, and the buyer does not need to pay any of the $8,000 back.
To qualify, you must be a “first-time home buyer.” This means that neither you nor your spouse has owned a residence in the last 3 years, and it must be towards the purchase of a primary residence (single-family home, condo, townhome or co-op).
How does a tax credit work?
Every dollar of a tax credit reduces income taxes by a dollar. Credits are claimed on an individual’s income tax return. Thus, a qualified purchaser would figure out all the income items and exemptions and make all the calculations required to figure out his/her total tax due. Then, once the total tax owed has been computed, tax credits are applied to reduce the total tax bill.
Example: So, if before taking any credits on a tax return a person has a total tax liability of $9,500, and $8,000 credit would wipe out all but $1,500 of the tax due ($9,500 – $8,000 = $1,500).
Also, since the credit is refundable, if your tax liability is lower than the $8,000 credit, the IRS will send you a check for the difference. Also, the credit is currently targeted towards single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000, however some buyers may still be eligible even if thier incomes exceed those limits. If a single buyer makes anywhere between $75,000 and $95,000, or a married couple makes between $150,000 and $170,000, the credit simply decreases. However, if incomes exceed $95,000 for a single taxpayer, or $170,000 for a married couple, they are not eligible.
*Another thing to know about the credit, is although you do not have to pay it back, the credit will be recouped on the sale of a property if it is sold during the first 3 years after purchase.
To apply for the credit, all you have to do is claim it on your IRS Form 1040 Tax return. there is no authorization, application, or approval process you need to go through other than just the standard approval process from a lender.
In addition to the tax credit, the American Recovery and Reinvestment Act of 2009 has several other provisions that will benefit homebuyers and housing market.
The legislation:
- Will help homebuyers in high-cost markets by extending the FHA, Fannie Mae and Freddie Mac loan limit of $729,750 through the end of 2009.
- Allows state housing finance agencies to help homebuyers at closing by advancing the credit as a loan using proceeds from tax-exempt bonds.
- Extends the tax code section 25C credit for energy-efficient home improvements through the end of 2010; increases the credit rate from 10% to 30%; raises the lifetime cap from $500 to $1,500; expands the list of eligible improvements.
- Provides a “patch for Alternative Minimum Tax for the tax year 2009.
If you would like to learn more, attend one of our free classes or refer friends and family so they can find out if they qualify for the $8,000 tax credit!
All seminars held at Cobalt Mortgage
• Saturday, September 12th at 10am
11255 Kirkland Way, Ste 100, in Kirkland
• Saturday, September 12th at 2pm
11255 Kirkland Way, Ste 100, in Kirkland
• Wednesday, September 16th at 7pm
11255 Kirkland Way, Ste 100, in Kirkland
• Thursday, September 17th at 7pm
2345 Eastlake Ave E, Suite 201, in Seattle
Attend and Learn:
- Why Buying Today Will Put $8,000 in Your Pocket!
- Why There Has Never Been a Better Time to Buy a Home
- How Renting Kills Your Net Worth
- How Buying a Home Will Increase Your Net Worth
- How to Be Credit Ready Today to Buy Tomorrow!
If you would like to attend, please RSVP as soon as possible so that we can plan and organize enough seating.
Call 425-605-1419
I highly recommend speaking with Virginia Lawson at Cobalt Mortgage if you are in need of a Mortgage Broker or have additional questions about the article above!
