How the New First-Time Buyer Tax
Credit Works
Under the new housing bill, home buyers who have not
owned a home in the last three years will be eligible for a tax credit equal to
10 percent of the property up to a maximum of $7,500.
Here’s how it works:
- The credit is $3,750 for married
couples filing separately. Unmarried people who jointly purchase a home will
be able to divide the $7,500 credit.
- This program is actually a loan,
which home buyers must repay over 15 years at zero percent interest
beginning in the second year after they purchase the home. A home buyer who
qualified for the whole credit would pay $500 for 15 years or about $41.67
per month.
- The credit applies only to homes
purchased on or after April 9, 2008, and before July 1, 2009.
- High-income home buyers don’t
qualify: Eligibility begins phasing out for single filers with adjusted
income of more than $75,000 and $150,000 for joint filers. It completely
phases out at $95,000 for singles and $170,000 for married couples filing
jointly.
Source: The Washington Post, Michelle Singletary
(07/03/08)Daily Real Estate News | August 4, 2008