Salt Lake City Real Estate Tips, Market Updates and

Local Happenings

By Real Estate Expert KathyOHomes

The is the first part of a four part series on understanding the section of  the American Recovery and Reinvestment Act of 2009 that provides a Home Buyer Tax Credit.  This enhanced Tax Credit provides an outstanding opportunity for home buyers in the greater Salt Lake City Utah area.

In its efforts to stimulate the economy and revive the housing market, Congress has enacted legislation providing a tax credit of up to $8,000 for first-time home buyers.  But time is of the essence for buyers who want to take advantage of this opportunity. Only homes purchased on or after January 1, 2009 and before December 1, 2009 are eligible.

Here is the $8,000 Home Buyer Tax Credit at a Glance

• The tax credit is for first-time home buyers only.
• The tax credit does not have to be repaid.
• The tax credit is equal to 10 percent of the home's purchase price up to a maximum of $8,000.
• The credit is available for homes purchased on or after January 1, 2009 and before December 1, 2009.
• Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.

So now this brings up a lot of questions!

Who is eligible to the tax credit?
First-time home buyers purchasing any kind of home-new or resale-are eligible to qualify for the tax credit. To qualify for the tax credit, the purchase of a home must occur on or after January 1, 2009 and before December 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs (recorded with the county in Utah) and the title to the property transfers to the new home owner.

What is the definition of a first-time home buyer?
The law defines a "first-time home buyer" as a buyer who has not owned a primary residence during the three-year period prior to the current purchase. For married taxpayers, the law checks the homeownership history of both the home buyer and his/her spouse.

As an example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.

How is the amount of the tax credit determined?
The tax credit is equal to 10 percent of the home's purchase price up to a maximum of $8,000.

Are there any income limits for claiming the tax credit?
The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

What is "modified adjusted gross income"?
Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine "adjusted gross income" or AGI. AGI is total income for a year minus certain deductions (known as "adjustments" or "above-the-line deductions"), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains.

To determine modified adjusted gross income (MAGI), add to AGI certain amounts such as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions and deductions for higher-education costs.

Thanks to the NAHB - National Association of Home Builders for answers to the above questions.

There is a lot of free information available to you about buying, selling or investing in Salt Lake City Utah real estate. For complete information about the Salt Lake City Utah real estate market including current homes for sale, property values and more please visit the most complete website online dedicated to everything [Profile.market2] real estate at www.BuySaltLakeHomes.com.  So please feel free to contact me with any of your mortgage questions and I will me more than glad to answer you queries. Call me on my cell at 801-518-4599 or email me at kathyo@kathyohomes.com.

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