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Our local CPA, Larry Harrison has offered an update to the Home-Buying Credit which was recently updated and passed through Congress.  See details below:

Tax Credit for First-time Homebuyers

Congress created a temporary new federal income tax credit for so-called first-time homebuyers. The maximum credit equals the lesser of: (1) 10% of the purchase price of a principal residence or (2) $8,000 (or $4,000 for those who use married filing separate status). The credit is refundable, which means it can be used to offset your entire federal income tax liability with any remaining credit refunded to you. However, you are only eligible if you have not owned a principal residence in the U.S. during the three-year period that ends on the purchase date. According to Congress, this makes you a first-time homebuyer.

The credit is generally available for principal residence purchases after 4/8/08 and before 12/1/09. For a newly constructed home, the purchase date is considered to be the date you move in. However, if you purchase a residence from your spouse, ancestor (parent, grandparent, and so on), lineal descendant (child, grandchild, and so on), or certain other related parties, you will be ineligible for the credit.

If you make a qualified home purchase in 2009 (before the 12/1/09 deadline), you can choose to treat the transaction as if it happened in 2008 and get your credit sooner by claiming it on your 2008 Form 1040.

Phased-out Rule Affects More-prosperous Individuals. The credit is phased-out or completely eliminated if your adjusted gross income (AGI) is too high. The phase-out range for unmarried individuals and married individuals who file separately is between AGI of $75,000 and $95,000. The phase-out range for married joint filers is between AGI of $150,000 and $170,000.

Purchases between 4/8/08 and 12/31/08 - Credit Must Be Repaid. Strangely enough, the new credit is really just a loan from the government. You must repay it (without interest) over 15 years starting with the second year after the year the credit is claimed on your Form 1040. Each year’s repayment will be added to the tax bill shown on your Form 1040 for that year.

In addition, if you sell the home or stop using it as your principal residence before the credit has been repaid, an accelerated repayment rule may apply. If so, the unpaid credit balance must be paid with your Form 1040 for the year when the triggering event occurs

Purchases between 1/1/09 and 12/1/09 – Credit Does Not have to be Repaid.

However, if you sell the home or stop using it as your principal residence within 36 months from the date of purchase, a repayment rule may apply. If so, the original credit must be paid with your Form 1040 for the year when the triggering event occurs.

For further Information please contact Larry Harrison at:

Larry N. Harrison & Co., CPAs
3101 Bee Caves Road, Suite 306
Austin, Texas 78746
"Our mission is helping clients identify and achieve their life goals"
Phone: 512-328-2046    Toll Free:  800-569-1527     Fax:  512-328-3927
www.harrisoncpa.com

On a personal note:  If buying a home is a goal of yours in the next 6 to 8 months, please contact me for further assistance.  Plus, ask your local CPA to see if you would qualify for this tax credit OR give Larry Harrison a call at the above number.  This could be a great opportunity to take advantage of - on your first home purchase!

Sincerely,

Darcie Shannon, REALTOR

Realm Real Estate Professionals

512-944-0485 (direct)

2009 ABOR Professional Development & Education Committee Member