Stimulus Plan Tax Credits for First Time Homebuyers
The new stimulus plan, passed just last week, provides an incredible tax incentive to first-time homebuyers if they purchase a home between January 1, 2009 and November 30, 2009. First-time homebuyers can claim a credit of 10% of the value of their home or $8,000, whichever is less, on either their 2008 or 2009 tax return. In other words, if you’ve already bought your first home in the beginning of 2009, you can claim the tax refund on your 2008 taxes; you don’t even have to wait until next year. If you’ve already filed your 2008 taxes and want to claim the credit now, you can file an amended return.
Moreover, the definition of “first-time homebuyer” has been relaxed. For the purposes of the stimulus plan, a “first-time” homebuyer is anyone who has not owned a home in the past three years. If you qualify as a first-time homebuyer and receive the tax credit, you must live in the home for at least three years, otherwise you will have to pay back the credit.
If you are single, your income must be $75,000 or less in order to claim the full credit. For married taxpayers, income must be $150,000 or less to receive the full credit. You don’t need to do anything special to obtain the credit — just claim the credit on your tax return and file your taxes on time.
The best part is, the credit is actually refundable. In other words, if you buy a home and your outstanding tax liability at the end of the year is zero, then you will actually get an $8,000 check from the IRS in the mail (so long as the value of the home you buy is at least $80,000). If your tax liability at the end of the year is $5,000, you will get a check for $3,000 back from the IRS (again, assuming the value of your home is at least $80,000).
Unfortunately, if you bought your home in 2008, then the new stimulus plan tax credit does not apply to you. However, you may still be eligible for the $7500 credit offered to new homebuyers last year, although that was not a true credit, but rather more like an interest-free loan to be paid back over 15 years. If you bought your home in 2008, click here for more information on last year’s tax incentive for first-time homebuyers.
Is there any reason that a person who bought their first home in an Illinois-type land trust (title in trustee’s name but they own it and live in it) wouldn’t qualify for the credit?
Well, from a purely logical perspective, I can’t see any reason why a property held in a land trust (bank or private) wouldn’t qualify, as long as you meet all of the other requirements (i.e. all of the beneficiaries of the land trust would otherwise qualify). However, your accountant might be able to better advise you on whether he can apply for the credit on your behalf if a land trust is involved.