More on Taxes (Credits)

Yesterday, I wrote about Alameda’s Measure P and the transfer tax today it is what the Feds is trying to give back when you buy a home.

During the whole housing meltdown Congress included, in H.R. 3221: Housing and Economic Recovery Act of 2008, a tax credit for new home buyers. The credit is available for a limited time only, and applies to home purchases after April 8, 2008, and before July 1, 2009. The credit also has income requirements of $75,000 for singles and up to $150,000 for married couples. So if you bought a home since April and you meet the requirements you need to talk to your tax preparer.

The credit 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. Make sure you understand the details of the credit because it has a long term effect on your future returns.

According to the government website:

The credit operates much like an interest-free loan, because it must be repaid over a 15-year period. So, for example, an eligible taxpayer who buys a home today and properly claims the maximum available credit of $7,500 on his or her 2008 federal income tax return must begin repaying the credit by including one-fifteenth of this amount, or $500, as an additional tax on his or her 2010 return.

Eligible taxpayers will claim the credit on new IRS Form 5405. This form, along with further instructions on claiming the first-time homebuyer credit, will be included in 2008 tax forms and instructions and be available later this year on IRS.gov, the IRS Web site.

If you bought a home recently, or are considering buying one, the following questions and answers may help you determine whether you qualify for the credit.

http://www.irs.ustreas.gov/newsroom/article/0,,id=186831,00.html

As you look at ways to buy a new home also look at: The City of Alameda's  Downpayment Assistance Program, the Program recently raised its maximum loan amounts so eligible first time homebuyers may now borrow $50,000 to $80,000, to help with the purchase of a home. Buyers can use the funds for a downpayment and/or closing costs for the purchase of a single-family residence (includes condos and townhouses) anywhere in the City of Alameda.

This program is being administered by First Home, Inc. For more information, please call First Home directly at (888)572.1222 x110. Click here to visit their web site.

To view the Downpayment Assistance Program brochure, click here. (5/08)

"Our House" by Madness -- I heard it on the radio this morning, and I thought it would be appropriate.