The proposed $15,000 tax credit to anyone buying a new primary residence is NOT part of the stimulus plan, as everyone had hoped.
However, here are some details on the new $8,000 refundable tax credit and the $7,500 tax credit that it replaces.
1). In the stimulus bill that is likely to become law this week, there is an $8,000 tax credit for first-time homebuyers who purchase a home from January 1, 2009 through December 1, 2009. This is a tax credit, not a deduction. First-time homebuyers reduce their tax bill by the amount of the credit. If they owed $5,000 in taxes, they would receive a refund of $3,000.
2). Single buyers can not make more than $75,000 adjusted gross income per year to claim the full tax credit. Similarly, married couples can only claim the maximum $8,000 if they earn less than $150,000 per year
3). The tax credit is available only to first-time homebuyers. A first-time homebuyer is someone who has not owned a home in the last three years. For example, if you sold a house on May 4, 2006, and you haven't had an ownership stake in a home since then, you are eligible for the tax credit if you close on a home after May 4 this year.
4). If a spouse owned or co-owned a home in the last three years, neither is eligible for the tax credit. This means they aren't eligible for the tax credit if their spouse was previously married to someone else, and that couple owned a home sometime in the last three years.
5). The tax credit is 10 percent of the home's cost, up to $8,000. If married filing separately, each spouse's maximum credit is $4,000.
6). The $8,000 tax credit does NOT have to be repaid if you buy the home in 2009, with this exception: If you buy the house this year, and you sell it within three years, you have to repay the tax credit. You repay it in a lump sum the next time you file a tax return.
7). As of today, if a first-time homebuyer bought a house between April 9, 2008 and Dec. 31, 2008 they still have to repay the $7,500 tax credit over 15 years. This may change....
Eric P. Egeland