What Are the Tax Credits for First Time Homebuyers?

From The Tax Dude - Neil Johnson

1. The tax credit is available for first-time home buyers only. Taxpayers who owned a main home at any time during the three years prior to the date of purchase are not eligible for the credit.

2. The maximum credit amount is $7,500. The credit is 10 percent of the purchase price of the home, with a maximum available credit of $7,500 for either a single taxpayer or a married couple filing jointly. The limit is $3,750 for a married person filing a separate return. In most cases, the full credit will be available for homes costing $75,000 or more.

3. The credit is available for homes purchased on or after April 9, 2008 and before July 1, 2009. Only the purchase of a main home located in the United States qualifies. Vacation homes and rental property are not eligible. For a home that you construct, the purchase date is the first date you occupy the home.

4. Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.

5. The tax credit works like an interest-free loan and must be repaid over a 15-year period. For example, an eligible taxpayer who buys a home today and properly claims the maximum available credit of $7,500 on his or her 2008 federal income tax return must begin repaying the credit by including one-fifteenth of this amount, or $500, as an additional tax on his or her 2010 return.

Hopefully, this helps you understand the credit a little more. If you have any questions, please feel free to e-mail me directly.

Neil Johnson
The Tax Dude®
www.thetaxdude.com
taxdude@covad.net

$100 minus $95!!

A little boy wanted $100 badly and prayed for two weeks but nothing happened. Then he decided to write a letter to the Lord requesting the $100. When the postal authorities received the letter addressed to the Lord, USA, they decided to send it to the President.

The President was so impressed, touched, and amused that he instructed his secretary to send the little boy a $5.00 bill, as this would appear to be a lot of money to a little boy. The little boy was delighted with the $5.00, and sat down to write a thank-you note to the Lord.

It said: Dear Lord, Thank you very much for sending me the money. However, I noticed that for some reason you had to send it through Washington, DC and as usual, those jokers deducted $95.