For first time home buyers, home purchase is one of the most valuable investments they can ever venture into. Thus, monetary assistance in any way is truly significant and important for those who prefer to materialize their dreams of having a house they can rightfully call their own. The federal government sees the need for financial support that home buyers need and the condition of the ailing real estate industry, therefore there are various plans regulated to serve this purpose. One of these is the stimulus plan for first time home buyers which aim to provide tax incentives to qualified applicants. To get the most out of this program, it is imperative to understand the different mechanics and conditions you need to comply with.
How does the stimulus plan works?
The American Recovery and Reinvestment Act is the stimulus program of the federal government which was primarily regulated in order to give tax credit for first time home buyers. This incentive is deemed to be a significant monetary assistance for those who wish to acquire homes for the first time. However, the plan is extended for home buyers who have bought a home property more than three years before and have sold their house and rented ever since. Hence, anyone who has not purchased any home in the previous three years is still eligible for the stimulus plan.
The program gives 10% tax break or a maximum of $8,000 as refundable tax credit for qualified applicants. It means that if you owe $9,000 for your taxes, you are only obliged to pay for the remaining $1,000 should you be granted of the stimulus plan incentive. Home buyers covered by the stimulus plan can enjoy its benefits as long as they stay in the acquired property at least three consecutive years. This is what you call recapture and it is part of the criteria set by the federal government.
What about income qualifications?
Eligibility for the stimulus plan likewise requires applicants to comply with the necessary income requirements for qualification. If you are an individual filer, you must not exceed an income of $75,000. Modification of joint filers is also noted, requiring couples who wish to file together not to exceed a joint income of $150,000.
It is also important to note that the home acquired using the stimulus plan of the government must only be used as primary residence. Therefore if you purchased a property and used it as rental units or vacation houses, you are not covered by the tax credit and therefore entitled to pay the required tax for your acquisition.
Other requirements noted are the date of the purchase which is only from January 1st to December 1st of 2009. It is therefore implied that any home purchase done before and after the specified dates are no longer covered by the tax incentive.
Now more than ever is the best time to take advantage of the stimulus program implemented by the government for financial support. First time buyers need to comply with the requirements as soon as they can in order to benefit from its offers.
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