Top Five Things About the 2009 First-Time Home Buyer
Tax Credit Program Realtors Should Know

 

For most first-time home buyers, buying their first home can be a challenge. The current economic climate and slump in the Real Estate market can make it even more confounding for buyers to decide when it may be a good time to buy.

Most Real Estate experts, however, believe this is an excellent time for first-time buyers to enter the market. Besides lower prices and attractive mortgage rates, first-time buyers can now take advantage of the first-time home buyer credit program under both the 2009 Federal First-Time Home Buyer Credit Program and the recently announced New York State tax credit called the New York State Mortgage Credit Certificate.

Here are the top five things Realtors must know about the federal and state first-time home buyer tax credit programs:

2009 Federal First-Time Home Buyer Tax Credit Program

1. Under this program, first-time home buyers can receive up to an $8,000 tax credit for purchasing a home between January 1, 2009 and December 1, 2009. (To qualify, the sale must close during this period.)

2. To qualify as a first-time home buyer, the purchaser or his/her spouse must not have owned a principal residence during the three years prior to the purchase.

3. The tax credit is determined by two factors: the price of the home and the buyer’s income. The tax credit is equal to 10% of the purchase price of the home, up to $8,000. Single buyers with an income up to $75,000 and married couples with incomes up to $150,000 can receive the maximum tax credit. The credit decreases for single buyers whose income is between $75,000 and $95,000, and for married couples whose income is between $150,000 and $170,000. Buyers above those income levels are not eligible for the tax credit.

4. The tax credit is fully refundable; if you pay less than $8,000 in federal income taxes, the government will send you a check for the difference. The buyer does not have to repay the tax credit unless he/she sells the home during the three-year period or it ceases to be the taxpayer’s principal residence within the same period.

5. First-time home buyers who purchase a home in 2009 can claim the credit on either a 2008 tax return, due April 15, 2009, or a 2009 tax return, due April 15, 2010. If the closing occurs after April 15, 2009, a taxpayer can still claim it on a 2008 tax return by requesting a filing extension or by filing an amended return.

New York State First-Time Home Buyer Tax Credit Program

1. To encourage first-time home buyers to purchase homes and revitalize the State’s Real Estate market, on August 10, 2009, Gov. David Paterson announced the New York State Mortgage Credit Certificate (MCC), which allows first-time home buyers to get a tax credit equal to 20% of their annual mortgage interest costs.

2. The MCC can be used to reduce a home buyer’s tax burden for every year the mortgage loan is outstanding. Under the MCC, first-time home buyers could, on an average, save $1,500 annually. The program will serve as an extension of the federal government’s first-time home buyer tax credit program, with buyers qualifying for both programs for a limited time.

3. The MCC will be administered by the State of New York Mortgage Agency (SONYMA) and, in order to qualify for the MCC, buyers must meet SONYMA’s income limit and home purchase price requirements.

4. First-time home buyers may apply for the MCC at the same time they apply for a fixed-interest rate mortgage at a participating lender.

5. Borrowers who are approved for an MCC can take advantage of the credit when they file their annual federal tax return. If a home buyer’s tax liability is less than the MCC credit in any one year, the amount of unused tax credit can be carried forward for up to three years.