8K Tax Credit

In an ongoing effort to deliver on swift implementation of the Obama Administration's recovery, stability and affordability plans, the U.S. Department of the Treasury touted today the availability of an expanded tax break for first-time homebuyers - a provision under the American Recovery and Reinvestment Act of 2009 that will make up to $8,000 available now to qualifying taxpayers who buy homes this year.

First-time home buyers represent a significant portion of existing single-family home sales. In 2008, nearly one out of every two homebuyers were buying for the first time, and the expansion in the first-time homebuyer credit will make it easier for first-time home buyers to enter the housing market this year.

The Internal Revenue Service (IRS) has posted on IRS.gov a revised version of Form 5405, First-Time Homebuyer Credit to incorporate provisions from the American Recovery and Reinvestment Act. Under the new law, qualifying taxpayers who buy a home this year before December 1 can claim up to $8,000, or $4,000 for married individuals filing separately, on either their 2008 or 2009 tax returns. Unlike the prior first-time homebuyer credit, this is money individuals do not need to pay back.

Q and A

Provisions of the 8K Tax Credit

Time frame to buy? - By December 1, 2009 (close on the home).

First-time home buyer? - A buyer who has not owned a home for three years.

Married first-time buyer? - Both buyers have not owned a home for three
years.

Claim tax credit? - Claim the tax credit on your federal income tax return.

Credit limits? - Single $75,000, Married $150,000.

Building a home? - You qualify, but you have to occupy the home by Dec. 1, 2009.

Tax credit pay back? - You are not required to repay except for certain conditions.

Access the tax credit now? - Amend your 2008 Tax Returns

Payback the credit? - It is a true credit. It does not have to be repaid.The only repayment requirement is if the home owner sells the home within three years of purchase.

Income above limits? - Single $75,000 - $95,000 and Married $150,000 - $170,000 are eligible to receive a partial tax credit.

Income max? - Single $95,000 and Married $170,000 exceeds the modified adjusted gross income.

Tax credit refundable? - If you pay less that $8,000 in federal income taxes, the government will write you a check for the difference.

-Example: You owe $5,000 in taxes, you would receive $3,000.

-Example: You have a credit due of $1000, you would receive $9000

For any further questions please email bkurpinsky@megastarfinancial.com