TOPIC: Valuable TAX Incentive Tips

Brought to you by Pam Dickman

Perhaps the largest benefit of the new Stimulus Bill to home buyers is a tax credit up to a maximum of $8,000. Although similar to a $7,500 credit that was enacted in 2008, this year’s tax credit is significantly improved. Unlike the original $7,500 tax credit, this new credit goes up to $8,000 and does NOT have to be repaid, making it a true tax credit rather than a long-term, interest free loan. Keep in mind that the home has to be your principal residence for three years if you want to avoid recapture.

Another benefit is the fact that the credit is refundable, meaning you can claim the credit to reduce your tax burden dollar for dollar and have any remaining amount refunded to you. For example, if someone who qualified for the full $8,000 credit owed $1,000 in taxes on April 15, 2010, he or she would receive a $7,000 rebate check.

There are several requirements home buyers will have to meet in order to qualify for the tax credit. The first is that the tax credit is only available to first-time home buyers or those who haven’t owned a primary residence in the past three years. The second limitation deals with income levels. To be eligible for the tax credit, an individual’s income cannot exceed $75,000 for the full credit and $90,000 for a partial credit. For those filing jointly, incomes cannot be greater than $150,000 for the full credit and $170,000 for a partial credit.

Lastly, potential buyers should know that the credit is only available for home purchases made on or after January 1, 2009, and before December 1, 2009, as the purpose of the credit is to stimulate home buying.

Besides the tax credit incentive, the Stimulus Bill also increases loan limits for buyers. The expanded loan limits will now provide greater access to affordable mortgage funding, especially for buyers looking to purchase a home in areas like New York where homes are higher priced. In NY the limits have been increased to $729,750 for a single family house. The stimulus bill is also providing a greater tax incentive for homeowners who make energy efficient updates. The bill triples the amount of an existing tax credit by providing a credit worth 30% of the cost of each improvement up from 10% with a lifetime cap of $1500.

Who matters most? YOU YOU YOU…

If you’re thinking about selling or buying a home, call the Realtor who keeps you informed of the market. CALL PAM TODAY! 718-445-1212 OR 917-304-1212