Getting a Mortgage? Don’t Miss out on the First-Time Homebuyer Tax Credit
You still have time to take advantage of the first-time homebuyer tax credit of up to $,8000. To receive the credit you must close on a home mortgage by midnight of November 30. If you’re planning to buy a home before the end of the year, here is what you need to know to keep from missing out on the federal tax credit.
Closing on a Mortgage Loan
The tax credit is for 10% (up to $8,000) of the purchase price of a home that costs $80,000 or more. You can only use the credit toward the purchase of a principal residence, so vacation homes and investment property don’t qualify. However, you can file for the credit if you owned a principal residence outside the U.S. during the previous three years.
The tax credit can’t be filed until you actually close on your mortgage and complete the purchase. If you are building a house, the purchase date is considered to be the first day you actually move into the home.
Former Homeowners May Qualify
Just because the credit is aimed at “first-time homebuyers” doesn’t mean you won’t qualify for it. If you have not owned a home in the three years prior to the date of closing on a mortgage loan you may be able to claim the credit on your 2009 tax return. If you are married, your spouse also can’t have owned a home within that three-year period.
There Are Income Restrictions
Homebuyers with higher incomes may only be able to claim a reduced credit because it is phased out based on modified adjusted gross income (MAGI). Married couples who file a joint return can file for the full credit if they have MAGI of less than $150,000. Other taxpayers who earn less than $75,000 can file for the full credit. The tax credit will be phased out for married couples with income of $150,000 to $170,000 and for other taxpayers who have income of $75,000 to $95,000.
Get Mortgage Quotes
If you really want to own a home, don’t wait to get mortgage quotes. Current mortgage rates are extremely low, making this an ideal time to be a homebuyer. Don’t forget to investigate any tax credits or down payment assistance programs that may be offered through your state or local government. For instance, Illinois’ Home Start Loan program offers a zero interest, short-term advance loan for up to $6,000 that can be used toward the down payment of a home.
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