Tax credit made easy

I recently found a flyer that was put out by the Illinois Association of Realtors.
It laid out tax credit in an easy to understand fashion, with bullett points.
Here’s how it read:

The American Recovery and Reinvestment Act of
2009 features an $8,000 tax credit for first-time
buyers who purchase a home on or after Jan. 1, 2009
and before Dec. 1, 2009.

Details of the tax credit include:

* The temporary credit is only available for
home purchases made from Jan. 1, 2009 to before
Dec. 1, 2009 and is equal to 10 percent of
the cost of the home, up to a maximum credit
of $8,000. (For example, a home purchased for
$80,000 or more would qualify for the full $8,000
credit while a $70,000 home would only qualify
for 10 percent, or $7,000)

*Buyers claim the credit on their federal tax return
to reduce their tax liability. If the credit is
more than their total tax liability that year, the
buyer will get a refund check for the balance.

*Only first-time homebuyers can take advantage
of the tax credit. A first-time buyer is defined
under the tax credit as an individual who has
not owned a home in the last three years.
For married joint filers, both must
meet the first-time
homebuyer test
to take the credit
on a joint return.

*Eligible properties include anything that will be
used as a principal single-family residence—including
condos and townhouses.

*There are income guidelines on the credit. Individuals
with an adjusted gross income up to
$75,000 (or $150,000 if filing jointly) are eligible
for the full tax credit. The credit is phased
down for those earning more and is not available
for those with an income above $95,000
(or $170,000 if filing jointly).

*The new tax credit does not have to be repaid
if the buyer stays in the home at least three
years. But if the home is sold before that, the
entire amount of the credit is recaptured on
the sale.

*People who purchased homes under the 2008
$7,500 tax credit program will still be required
to repay that credit to the government over a
15-year period.

Consult with your tax advisor to learn more about the tax credit

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