On November 7, 2009 President Obama signed into law the extension of the First Time Home Buyer Tax Credit and expansion of the credit to include previous and/or current home owners.
What exactly is a Tax Credit? Well, it’s a lot better than a tax deduction – that’s for sure. Receiving a tax credit means that your tax bill owed to the IRS is reduced by the amount of the tax credit you are eligible to receive AND – the really great part – IF YOU DON’T OWN MONEY, THE IRS PAYS YOU THE AMOUNT OF THE TAX CREDIT!!! So let’s say you owe $2,000 in taxes when you prepare your return and you qualify for the full $8,000 tax credit. Then the IRS will deduct the $2,000 you owe from the $8,000 credit they owe you and they’ll send you the difference. If they owe you a refund already, they’ll add that refund to the amount of your tax credit and send you the whole kit and kaboodle!
What a deal – the government is paying you to buy a house!
- First-time Buyer:
- up to $8,000 credit ($4,000 married filing separately) or 10% of purchase price
- may not have had in interest in a principal residence for 3 years
Check this link for a comparison of the old rules and the new rules plus a lot more important information as found on the NAR website: