Housing Bill - New home tax credit: Impact on single salary over $75K?

Question

I'm not sure how this Bill (HR 3221) works - I will be buying a house in the time period defined by this bill - but my salary is about $96K. It mentions "phasing out" over $75K. Will I get the $7,500 tax credit as a first time home buyer? Can anyone explain (simply - the more I look this bill up the more confused I seem to be sadly) what this would mean to someone in my position? Thank you very much.

Answer 1

The senate version of the bill gives a $7000 tax credit for buying a foreclosed home.  On the other hand, the house version gives first time homebuyers a $7500 tax credit.  Since they both passed their respective versions, the bill is now in committee. The details are fuzzy, so I think you'll need to wait a bit before someone can give you a solid answer.

Answer 2

It's not your salary but your AGI that has to be below $95,000. So you'll probably qualify for some. Look at your AGI (adjusted gross income) on last year's tax return to get an idea.

Answer 3

Another question.  What is the time period when you purchase your home?  One article I saw April 9th and another one I saw August 9th of this year.  I pruchased my home April 25th.  I hope April 9th is the case.

Answer 4

I am in similar situation and I might be wrong in the interpretation of the bill but I think that 7500 will come into play if you buy a foreclosed property

Answer 5

You would not be able to get the tax credit. It phases out completely for single people making $95,000 or more.

Answer 6

This so called Tax Credit, is nothing more than an interest free loan. This credit has what the bill calls a “recapture” period where you have to pay the IRS back over the course of possibly 15 years the full amount of the tax credit. For example, lets say you qualify for the full 7,500 credit. The legislation says, “if a credit under subsection (a) is allowed to a taxpayer, the tax imposed by this chapter shall be increased by 6 2/3 percent of the amount of such credit for each taxable year in the recapture period. This means that 6.66667% of 7500, which is 500, is added to your tax bill for 15 consecutive years. That is a mighty attractive loan offer, but certainly nothing close to a tax savings. The real disadvantage is if you sell the house before the recapture period is over, they now accelerate your repayment and this can cause a larger than expected tax bill at the end of the year. Now to address your specific question: Based on the current legislation (remember this has not gone through conference committee and the President has NOT signed it) it appears that with a annual income of 96,000, you would be eligible for the lesser of 10% of the total home purchase price or around 6,000 dollars (quick math). The amount reduced is based on the ratio of 75,000 bearing to 20,000. I would recommend NOT claiming this Tax Credit or allowing this tax credit to influence you to buy because it does nothing but help the sellers (builders, real estate agents, etc.) If the fed really wants to help out the buyers, they need to fork up the cash and forget the repayment. Republicans don’t like this bill and I don’t like it either.