North Charleston, SC (PRWEB) September 29, 2008
The First-time Homebuyers Tax Credit being offered by the IRS is a good thing, according to JK Harris and Company, as long as you view it for what it really is.
"I don't see any immediate negative in taking the credit, as long as it is viewed as a tax-free loan that will need to be repaid," said Troy Sholl, an attorney who works as a Licensed Taxpayer Representative for JK Harris, the nation's largest tax resolution firm. "Homebuyers will be required to repay the credit to the government, without interest, over 15 years or when they sell the house."
The tax credit is part of the recently enacted Housing and Economic Recovery Act of 2008 and is available on home purchases made after April 8, 2008, and before July 1, 2009. The credit is 10 percent of the actual purchase price of the home, up to $7,500.
"The $7,500 total credit will apply to most home sales, except when the purchase price is less than $75,000," Sholl said. "In that case, the credit would be 10 percent of the actual purchase price."
Principal residences, not vacation homes or rental properties, qualify for the credit, Sholl said. A first-time homebuyer is one who has not owned a principal resident during the three-year period prior to the purchase. If married, the homeownership history of both the homebuyer and the spouse is checked. So if the homebuyer has not owned a home in the last three years, but his or her spouse has, the tax credit would not be applicable.
As for the repayment, the homebuyer will repay the loan in yearly installments of $500 over 15 years. The repayment will begin with the second tax year after the tax credit is claimed. So if the credit was claimed on the 2008 tax return, the repayment will begin with the 2010 tax return.
There are also guidelines for income. Keep in mind exceptions may apply depending on specific situations.
"The credit is unavailable for individual taxpayers with adjusted gross income of $75,000 or more, and married joint filers with adjusted gross income of $150,000 or more," Sholl said.
About JK Harris:
JK Harris & Company, LLC, (http://www.jkharris.com) based in North Charleston, S.C., is the nation's largest tax resolution firm and has served over 200,000 customers since its founding in 1997 by John K. Harris. JK Harris consultants are available to meet with consumers in over 425 locations nationwide by appointment only. The company also provides services for student loan debt, fee-based financial planning, tax return preparation, and audit representation.