- Personal Finance
Who qualifies for the $8.000 tax credit that congress proposed
Time is of the essence ... new opportunities for first time home buyers.
The tax credit for new home buyers will help the average American who otherwise would not have had the opportunity to purchase a home. The tax credit is offered to all citizens who meet the criteria listed below. Congress has enacted this new legislation in order to help the lower and middle class create wealth. This tax credit gives tax payers who are first time home buyers $8,000 to invest in the mortgage market.
Single tax payers with a modified adjustable gross income (MAIG) of more than $75.000 will be reduced. As well as married couples filling joint return whose MAIG is more than $150.000 - For singles who makes $95.00 and up, the tax amount is reduced to zero. And married couples with an MAIG of $170.000 will also faced with reductions.
So who qualifies, those tax payers whose income is < than or = to $75.000. A married couples whose joint return is < than or = to $150.000. Anyone else whose income category falls above those brackets may not be qualifying.
This tax credit that the Obama administration has proposed will not have to be paid back. It is a stimulus designed to stimulate the economy. As you can see, there is no blind spot here; those who meet the qualifications will be stimulated. Those that are not qualified unfortunately will not receive this stimulus.
This credit is determine by tax payer modified adjusted gross income (MAGI). What that means is an adjustable gross income for a year minus deductions such as student loans, IRA contribution and some foreign housing deductions. This AGI can be found on form 1040 and 1040-EZ on line four of these documents.
The difference between this home tax credit and the one congress enacted on July of 2008 is that this tax credit will not have to be repaid. The former tax credit enacted by congress was an interest free loan; whereas this one is free money. However, those who qualified for this tax credit will have to be a residence at the home purchase for at least three years. Some exceptions do exist.
Citizens who have purchased a home in early 2009 under the 2008 tax credit can still claim the $8,000 tax credit instead of the $7,000 they would have gotten. All they would have to do is file an amended 2008 tax return with a 1040x form.
According to governmental laws, the “fist time home buyer” is described as a buyer who has not owned a principal residence during the three-year period prior to the purchase. But time is immerging, to qualify; the home buyer must initiate their purchase after Jan 1, 2009 and before Dec 1, 2009. As a reminder, the purchase date is the date when closing occurred.
In addition to the tax credit, the new law enacted by the American Recovery and Reinvestment Act of 2009 will extend to the FHA, Fannie Mae (FRE) and Freddie Mac (FNM) loan of $729,750 by the end of 2009 as a means to help home buyers in high-cost markets, purchase their dream homes. Fannie Mae buys loans from approved mortgage sellers, either for cash or in exchange for a mortgage-backed security, whereas Freddie Mac provide banks and other financial institutions with fresh money to make new loans.