THE HOUSING ASSISTANCE TAX ACT-
“First-Time” homebuyers’ act
gives buyers a TEMPORARY
“refundable” tax credit equal to 10 percent of the
purchase price of a home, up to $ 7,500 ($ 3,750 for Married
individuals filing Separately).
The credit phases out for taxpayers with Adjusted
Gross Income between $ 150,000 and $ 170,000 ($75,000 to $
95,000) for MFSeparate).
The credit is eligible to be taken for new first-time
homes purchased between April 9, 2008 and July 1, 2009.
“temporary” nature means that the credit MUST be repaid
back in equal installments over 15 years, or sooner if the
home is sold before then; in which case the remainder is
generally due immediately upon sale.
The “First-time” nature means that the homebuyer,
(and spouse) had no ownership interest in a principal
residence during the three-year period before the closing
date of the current home purchase.
who do NOT own a principal residence (a rental or vacation
home) qualify because the qualified ownership is only to
The “refundable” nature means that the taxpayer
will receive a refund of the excess homeowners’ tax credit
not used on that return where the credit is claimed.
two or more unmarried taxpayers purchase the residence, the
credit may be allocated (split) among the owners, but
not to exceed the total amount of the eligible credit.
If any taxpayer sells the home before the end of the
tax year in which the credit would be allowed the credit
will be disallowed and must be repaid back in full.
Nonresident aliens will not be allowed to take the
credit, nor those who take the District of Columbia
first-time homeowner tax credit.
The credit will be disallowed if the home is
purchased from certain related persons.
the taxpayer sells or no longer uses the home as principal
residence (converts to rental) before repaying the credit,
the unpaid full balance becomes due in the year of the
conversion or sale.
However, the amount of the recaptured credit may not
exceed the amount of gain from any sale to an unrelated
credit does not have to be repaid if the taxpayer dies.
Special rules exist if the residence becomes incident
to a divorce.
property tax deduction is allowed to non-itemizers; meaning
those who do not itemize deductions can take up to $ 1,000
deduction for state and local property taxes to married
couples filing jointly ($ 500 for single taxpayers or heads
of households. The
deduction is an addition to their Standard Deduction.
This rule is in effect for Tax Year 2008 only!
There are other rules changes to the Low-Income Housing Tax Credit for developers and Tax Exempt Housing Bonds for investors.
can benefit from the new law by being able to use
accumulated and unused AMT and Research & Development
credits by electing not to use the 50% bonus depreciation
allowed under the Economic Stimulus Act of 2008 (the Rebate
Check Program Act).
One last highlight of this Act requires banks to begin reporting merchants credit and debit card revenue payments received during the year to the IRS beginning January 1, 2011. The banks will be required to also report the merchants’ name, address and Employer Identification Number or Social Security Number. This will be a strong incentive for merchants to correctly report income.
Seland & Winn®
28 Batavia City Centre Batavia, NY 14020
Union Road Cheektowaga, NY 14227
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