There is a great article on MarketWatch.com about the tax credit and how it works. (see linke at the bottom of this post) A reader wrote in to inquire whether two people who are planning on getting married can by a home before they are married and then both claim the $8,000 credit.The answer was a resounding NO! Here are some important things you need to know about the Federal Tax Credit for purchasing a home.
1. It's not really $8,000... ...That's right, its 'up to' $8,000. The law actually says that the credit is $8,000 OR 10% of the purchase price of the home, which ever is lower. This means homes less than $80,000 yield a lower credit.
2. It is for first-time home buyers. The definition of a first-time home buyer is anyone that has never owned a home or who has owned a home in the past but has not been a homeowner for the past 3 years.
3. You can only take a credit equal to what you paid in Federal Income taxes. There are some disputes on this one so anyone considering purchasing a home should check with their accountant or CPA.
4. Multiple buyers of a property, i.e. spouses, betrothed, life partners, friends, etc, can only split the tax credit. So if there are two people, each owning 50% interest in the property, then they don't both get $8,000. They would have to split it.
5. And LAST OF ALL! The tax credit is set to expire December 1, 2009! That's right! Get out there and get shopping if you are a first time home buyer and if you are a builder, Realtor or investor, get to marketing that home. After December 1st it may be a tougher sell!
Read the article that inspired this one and many others on this blog at http://marketwatch.com/ For the specific article that relates to the tax credit got to http://www.marketwatch.com/story/expert-gets-it-wrong-on-home-buyer-tax-credit-2009-07-24?link=kiosk
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