Are you a first-time homebuyer? Do you plan to purchase your home now? Then this is just the perfect timing. Aside from the getting the chance of purchasing affordable homes, you can also enjoy an added bonus provided by the government. Thanks to the stimulus bill, first-time homebuyers can now enjoy tax credit of as much as $8,000. 

How does this work? 

For this to be applied, taxpayers should claim the tax credit using the 5405 form. The amount can be $8,000 (as mentioned above) or 10% of the property’s purchase price. For married couples, who decide to file separately, the equivalent amount can be $4,000 for each couple. 

The said amount can be paid back to the taxpayer, in the event their federal tax is less than the tax credit. For example, tax owed for the year is only $4,000, the remainder $4,000 will then be treated as a credit refund. The IRS shall then send a check to the taxpayer in order to pay back the difference. 

Who is eligible? 

As mentioned, this is for the benefit of the first-time homebuyers. They should have purchased their homes last January 1,2009 or until December 1, 2009. They should also have a Modified Adjusted Gross Income (MAGI) of $75,000 for single applicants or $150,000 for married applicants with joint returns. The tax credit phase-out begins when their MAGI exceeds the limits and shall be equivalent to zero if the MAGI reaches $20,000 excess. 

Properties purchased shall also be single-family homes, town houses or condominiums, mobile homes or boathouses, trailer homes and cooperative apartments. This property shall be treated as a primary residence within 3 years from the date of purchase. 

How is it different from the 2008 stimulus bill? 

Last 2008, a similar stimulus was created. This was enacted according to the Housing Recover Act of 2008. First-time homebuyers were granted a tax credit but the amount was only $7,500 for singles or $3,500 for couples with separate returns. Eligibility is no different from the 2009 tax credit. However, the 2008 tax credit was designed as an interest-free loan. Homebuyers would have to pay back the tax credit on 2010. This should be paid back within 15 years with 15 equal installments. Unlike the 2009 tax credit, it will only be repaid if the homeowner fails to maintain the home as their primary home within 3 years from the date of purchase. 

Tips for FHA borrowers 

The tax credit can now be monetized for the benefit of the FHA borrowers. The amount can now be added to 3.5% down payment required. This could help homeowners build more equity on the early stage of homeownership. On the other hand, it can also be used to pay the closing cost. This could help homeowners lessen their burdens in coming up with the fund to pay the huge amount involved. All of these advantages were made possible by the FHA loan bridging. However, there will be a nominal fee of as much as 2.5% or $200 maximum.