Bob Scherbarth & Ed Duggan's Dare to Compare Team

Who is Eligible:

• The $7,500 tax credit is available for first-time homebuyers only.
• The law defines a first -time homebuyer as a buyer who has not owned a home during the past 3 years.
• All US citizens who file taxes are eligible to particpated in the program.

Income Limits:

• Homebuyers who file as single or head-of-household taxpayers can claim the full $7,500 credit if their modified adjusted gross income(MAGI) is less than $75,000.
• For married couples filing a joint return, the income limit is $150,000.
• Single or head-of-household taxpayers who earn between $75,000 and $95,000 are eligible to receive a partial first time homebuyer tax credit.
• Married couples who earn between $150,000 and $170,000 are eligible to receive a partial first-time homebuyer tax credit.
• The credit is not available for single taxpyers who MAGI is great than $95,000 and married couples with a MAGI that exceeds $170,000

Effective Dates for the Tax Credit:

• First-time homebuyers would receive a $7,500 tax credit for the purchase of any home on or after 4/9/2008 and before 7/1/2009. To qualify, you must actually close on the sale of the home during that period.

Tax Credit is Refundable:

• A refundable credit means that if you pay less thatn $7,500 in federal income then the government will write you a check for the difference.
• For example, if you own $5,000 in federal income taxes, you would pay nothing to the IRS and would receive $2,500 from the government.
• If you are due to receive a $1,000 tax return from teh government, your refund would grow to $8,500 ($1,000 plus $7,500 from the tax credit).
• Buyers can tax the tax credit in their 2008 or 2009 tax returns.
• If you purcased a home in 2008, the tax credit is taken off your 2008 tax return. If you buy in 2009, you have the optio nof taking the credit on your 2008 or 2009 tax return.

Types of Homes that Qualify for the Tax Credit:

• All homes, whether single-family, townhomes or condos will qualify provided that the home will be used as a principal residence and the buyer has not owned a home in the prior 3 years. This also includes new construction.

Payback Provisions:

• The tax credit essentially servies as an interest-free loan to be repaid over 15 years.
• For example, a homebuyer claiming a $7,500 credit would repay the credit at $500 per year. However, the buyer doesn't have to start repaying the credit until 2 years after the tax year in which the credit is claimed.
• If the homeowner sold the home, then the remaining creid twould be due from the profit of the home sale.
• If there was sufficient profit, then the remaining credit payback would be forgiving

For more details on tax credit, go to www.federalhousingtaxcredit.com

compiled by Karen Guess- Sr. Loan Specialist

Mason Dixon Funding, INC

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