Many of us have heard about some of the tax breaks in the stimulus package, but the details have been skimpy.
Readers have been e-mailing me questions seeking clarification, particularly on the first-time homebuyer's credit.
This credit is a revision of one passed last year that was worth 10 percent of the home's price - not to exceed $7,500 - on purchases from April 9 last year through June 30 this year. The catch: The credit was really an interest-free loan that must be repaid over 15 years. The new and improved credit is worth up to $8,000 on purchases made this year through Nov. 30. You won't have to repay the credit as long as you don't sell the house within three years.
Here are answers to some readers' questions, along with information about some tax breaks that aren't getting a lot of publicity:
Is there an income limit for the first-time homebuyer's credit?
Yes. Like last year's credit, this one starts to phase out once income reaches $75,000 for singles and $150,000 for married couples filing jointly, says Mark Luscombe, principal analyst with CCH, an Illinois provider of tax information.
Who qualifies as a first-time homebuyer?
You could be eligible for the credit if you haven't owned a house the previous three years.
We are about to close on our home purchase. We have not filed our taxes yet. Can the $8,000 credit be applied toward our 2008 return, or do we have to wait until 2009?
You can claim the $8,000 credit on your 2008 return, Luscombe says.
I bought my house on Jan. 28. I already filed my taxes, and I am getting the $7,500 tax credit. However, what do I do now that it has increased to $8,000?
You will have to file an amended return, Luscombe says.
To be clear on the form of the homebuyer's credit: Let's say this year I am getting $2,000 back in taxes. If I buy a house this year before November ... I would get a $10,000 refund next year, never to be paid back?
Yes. This is a refundable credit, meaning even if you don't owe any taxes, you'll get the credit through a refund. You just have to stay in the house for at least three years.
It looks like those of us who bought a house last year and took the $7,500 credit on our taxes this year will still have to repay our "credit," while those who buy after Jan. 1 this year will not have to pay it back.
Yes, those buying a house last year will have to repay the credit. But those who bought a house before April last year got no credit at all.
