Real Estate News

Frequently asked questions according to the National Association of Realtors.

In 2009, Congress increased the tax credit from $7500 to $8000 and made serveral additional improvements.  This revised $8000 tax credit applies to purchases on or after January 1, 2009 and before December 1, 2009. Below are just a sampling of some the frequently asked questions about this new tax credit.

1. So what happens if the purchaser is eligible for an $8000 credit but their entire income tax liability for the year is only $6000.

    This tax credit is what’s called “refundable” credit. Thus, if the eligible purchaser’s total tax liability was $6000, the IRS would send the purchaser a check for $2000. Most taxpayers determine their tax liability by referring to tables that the IRS prepares each year.

2. Do individuals with incomes higher than the $75,000 or $150,000 limits lose all the benefts of the credit?

Not always. The credit phases -out between $75,000- $95,000 for singles and $150,000 – $ 170,000 for married filing joint. The closer a buyer comes to the maximum phase-out amount, the smaller the credit will be.  The law provides a formula to gradually withdraw the credit. Thus, the credit will disappear after an individuals income reaches $95,000 (single return) and $170,000 (joint return).

3. What’s the definition of “principal residence?’

    Generally, a principal residence is the home where an individual spends most of his/her time (generally defined as more than 50%). It is also defined as “owner occupied” housing. The term includes single-family detached housing, condos or co-ops, townhouses or any similar type of new or existing dwelling.  Even some houseboats or manufactured homes count as principal residences.

4. Can I use my credit amount as part of my downpayment?

    NO.

5. Do I have to repay the 2009 tax credit?

    NO. There is no repayment for 2009 tax credits.

These are just a few of the questions asked of NAR regarding the 2009 tax credit. If you didn’t see your questions here please give me a call and I will see if it is one of the ones I didn’t put up on my blog.  Or will see if I can find the answer.  Look forward to hearing from you.  206.612.6881