New Tax Credit Lowers Cost of Home Buying

There is now a new tool for homebuyers and home sellers to make purchases more affordable: an $8,000 First-Time Homebuyer Credit available to qualifying first-time homebuyers. When combined with the other incentives offered through Find Your Place in Chicago, such as the $10,000 gift from The Partnership for New Communities, the new Credit makes buying a home now a better deal than ever.

The new First-Time Homebuyer Credit is part of President Obama’s economic stimulus plan. Below are the details:

The First-Time Homebuyer Credit allows homebuyers to subtract up to $8,000 from the amount they owe on their federal income tax bills.
The Credit is not a deduction from taxable income, but rather an absolute credit on monies owed, subtracted from the bottom line amount owed in federal income taxes after all deductions are taken.
The Credit is available for homes of any price, but is capped at $8,000 or 10% of the purchase price, whichever is less.
Unlike the previous $7,500 credit (passed in fall of 2008), the new Credit does not need to be repaid provided that the buyer remains in the home for 3 years as its owner.
Buyers must purchase the home as their main home (not an investment or vacation property) between January 1, 2009 and April 30, 2010.
Buyers must be first-time homebuyers. This includes those who have never owned a home AND those who have not owned a primary residence in their name during the past 3 years.
The buyer’s modified adjusted gross income must be less than $75,000 ($150,000 if married and filing jointly).
The credit can be combined with TaxSmart Mortgages, providing homebuyers with even more tax savings.