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Letter From the Heart – March 2009

November 30, 2010

I hope this letter finds all of you well and ready for Spring.

I thought, since this month quite a bit of “stimulus” is going on at all levels of our government I might take this time, as some of my colleagues are doing, to address this $8000 tax credit we are all hearing about.

The President has signed into law the “First-time Home Buyer Tax Credit”.

This credit will apply to 2009 buyers only. So only those who purchase a home after January 1 and before December 1, 2009 are eligible for the credit.

There are income limitations. Single buyers with an adjusted gross income of $75,000 or married couples with an $150,000 adjusted gross income level would be eligible. Reduced credits may apply for those with higher gross incomes.

The tax credit is equivalent to 10 percent of the purchase price of the home which must be the principal residence and is capped at a maximum of $8,000. The tax credit does not have to be repaid. This tax credit will be refunded to a buyer, if his or hers year end tax liability is less than the credit.

The credit is applied to the 2009 Federal Tax Return.

The first time home buyer is defined for the purpose of this legislation, as someone who hasn’t owned a principal residence for three years before buying  a house. As it must be a principal residence, any vacation home purchase within this time frame would not count against the potential buyer.

And finally, buyers would  have to own the home for at least three years in order to capitalize on the credit. If the home is sold before then, the credit will need to be returned to the government.

If you have questions about this tax credit  please feel free to contact me.

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