Why You Should Buy Your First Home In Denver Now!

Take advantage of great Denver Real Estate prices, interest rates and first time home buyer tax credits.

I know there are literally hundreds of articles, blogs, etc., touting why now is such a great time to buy Real Estate in Denver due to low prices, high inventory and great interest rates. Today, I am not going to write about any of those! Instead, read on to find out about the first time home buyer’s tax credit the IRS is offering.

Congress recently approved a tax credit for first-time homebuyers that can be worth up to $7,500. The credit, however, acts more like a no-interest loan because it must be repaid to the government over 15 years.

First-Time Homebuyer tax credit

First-time homebuyers should begin planning now to take advantage of a new tax credit. Available for a limited time, the credit:

Applies to home purchases after April 8, 2008, and before July 1, 2009.
Reduces a taxpayer’s tax bill or increases his or her refund, dollar for dollar.
Is fully refundable, meaning that the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax that they owe.

The credit operates very much like an interest-free loan because it must be repaid in equal installments over a 15-year period. Taxpayers will claim the credit on new IRS Form 5405, First-Time Homebuyer Credit.

Only the purchase of a main home located in the United States qualifies. Vacation homes and rental properties are not eligible. For a new construction home, the purchase date is the first date you occupy the home.

For anyone who owned a home at any time during the three years prior to the date of purchase of a home are not eligible for the credit. This means that first-time homebuyers and those who have not owned a home in the three years prior to a purchase can qualify for the credit.

If you make an eligible purchase in 2008, you claim the first-time homebuyer credit on your 2008 tax return. If you make an eligible purchase in 2009, you can choose to claim the credit on either your original or amended 2008 return, or on your 2009 return. Is that sweet or what?

The credit is 10 percent of the purchase price of the home, with a maximum available credit of $7,500 for either a single taxpayer or a married couple filing jointly. The limit is $3,750 for a married person filing a separate return. In most cases, the maximum credit will be available for homes costing $75,000 or more. The credit normally must be repaid over a 15-year period starting the second year after the year the credit is claimed.

The credit is reduced or eliminated for higher-income taxpayers. The credit is phased out based on your modified adjusted gross income. In general, for a married couple filing a joint return the phase-out begins at $150,000 and is completely phased out at $170,000. For other taxpayers, the phase-out range is between $75,000 and $95,000.

Not everyone will qualify for the credit. There are other rules that may impact your eligibility and decision to claim the First-Time Homebuyer Credit. Please contact your tax consultant or get all the information at the IRS website.

Links:

Of course if you have any questions, comments or would like to find your first (or 3rd) dream home, don’t hesitate to call, email, text any time.