The Treasury Department has moved at record speed to implement one piece of the new American Recovery and Reinvestment Act of 2009 aka the stimulus act.
The Department and the Internal Revenue Service which will manage it recently announced that forms and regulations are already in place for homebuyers who wish to claim the first-time credit enabled under the act.
The credit is available to homebuyers who purchase a home before December 1, 2009. In an effort to make the effects of the credit felt quickly in the economy, homebuyers can claim the credit either on their 2009 tax return or immediately on the 2008 return due in April.
The tax credit represents 10 percent of the purchase price of a home up to a maximum of $8,000 or $4,000 for married taxpayers filing separate returns. The $7,500 credit that was authorized under earlier legislation last year was actually a 15 year loan; the new tax credit does not have to be repaid by the homeowner under ordinary circumstances.
The credit does have to be repaid if the homeowner sells the home in less than 36 months or if the home ceases to be his principal residence during that time.
Below is information about the opportunities the program may provide to you as a Nashville homebuyer, homeowner or home seller.
Major Modifications Italicized
| February 2009 FEATURE | CREDIT AS CREATED JULY 2008 APPLIES TO ALL QUALIFIED PURCHASES ON OR AFTER APRIL 9, 2008 | REVISED CREDIT – EFFECTIVE FOR PURCHASES ON OR AFTER JANUARY 1, 2009 AND BEFORE DECEMBER 1, 2009 |
| Amount of Credit | Lesser of 10 percent of cost of home or $7500 | Maximum credit amount increased to $8000 |
| Eligible Property | Any single family residence (including condos, co-ops, townhouses) that will be used as a principal residence. | No change All principal residences eligible. |
| Refundable | Yes. Reduces (or can eliminate) income tax liability for the year of purchase. Any unused amount of tax credit refunded to purchaser. | No change Purchasers will continue to receive refund for unused amount when tax return is filed. |
| Income Limit | Yes. Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000). | No change Same income limits continue to apply. |
| First-time Homebuyer Only | Yes. Purchaser (and purchaser’s spouse) may not have owned a principal residence in 3 years previous to purchase. | No change Still available for first-time purchasers only. Three-year rule continues to apply. |
| Revenue Bond Financing | No credit allowed if home financed with state/local bond funding. | Purchasers who utilize revenue bond financing can use credit. |
| Repayment | Yes. Portion (6.67% of credit or $500) to be repaid each year for 15 years, starting with 2010 tax filing. | No repayment for purchases on or after January 1, 2009 and before December 1, 2009 |
| Recapture | If home sold before 15-year repayment period ends, then outstanding balance of repayment amount recaptured on sale. | If home is sold within three years of purchase, entire amount of credit is recaptured on sale. Applies only to homes purchased in 2009. |
| Termination | July 1, 2009 (But note program changes for 2009) | December 1, 2009 |
| Effective Date | Purchases on or after April 9, 2008 and before January 1, 2009. Repayment to begin for 2010 tax year. | All revisions are effective as of January 1, 2009 |
I strive to keep my clients well informed. Please click here to call me directly if you have questions or would like to put the program to work for you.
Best,
JoAnne Staler
JoAnne Staler, Nashville Tennessee REALTOR with Rochford Realty & Construction Company is providing a unique level of service to home buyers and home sellers in Nashville, Brentwood, Franklin, Williamson County, Green Hills, Belle Meade, Bellevue, West Meade, Forest Hills, Oak Hill, Vanderbilt, Belmont, Midtown, Downtown, Historic Areas, Spring Hill, and Thompson Station Tennessee. Whether Buying or Selling Real Estate locally or Relocating to Middle Tennessee, let a Top Selling Nashville Real Estate Agent help. To find out more about JoAnne Staler or search for real estate via the Middle Tennessee MLS visit www.JoAnneStaler.com.
