First-time homebuyers who purchase homes from the start of 2009 until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. A first time home buyer is defined as an individual who has not had an ownership interest in a principal residence in the previous three years.

Tax Credit
The tax credit is a “refundable” credit. For example, if the actual tax liability (the amount of tax that you owe on the return once all the computations are complete) is $6,000 the purchaser would receive a tax credit refund of $2,000. Also, remember that the credit will have to be paid back if the purchaser sells the home within three years.

Phase Out Examples
According to the plan, the tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.

example 1: Assume that a married couple has a modified adjusted gross income of $160,000. The applicable phase out to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time homebuyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.

example 2: Assume that an individual homebuyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.

Remember, these are general examples. You should always consult your tax advisor for information relating to your specific circumstances.

Contact our mortgage consultant, Jorge Iglesias for more information at 954-607-8024 or email him at Jorge.iglesias@fembi.com .

Coral Facts

Did you know that once you join the credit union, all your family members are eligible too?