You might want to consider taking advantage of the first time home buyer tax credit. Regardless of whether you’re buying a brand new home or a condo, this tax break can really help your bottom line when it comes to saving money on taxes.
What is the US First Time Home buyer Tax Credit?
The US First Time Home buyer Tax Credit is a federal tax credit that can provide up to $8,000 in tax credits against the purchase of a home. To be eligible for the credit, you must have never owned a home before and your total net worth at the time of purchase cannot exceed $125,000. The credit may also be available to certain veterans and their spouses.
The credit was enacted as part of the American Recovery and Reinvestment Act of 2009 and provides a refundable tax credit of up to $7500. The maximum credit available is $16,000 per household member.
Who is eligible for this tax credit?
The first time home buyer tax credit is available to individuals who have not owned a home within the past three years and are purchasing their first home. You must be at least 18 years old and have a valid Social Security number in order to qualify for the credit.
The maximum credit you can receive is $8,000. The credit is refundable, so you can receive a check directly from the IRS.
How do I use this tax benefit to buy a home?
There are several ways to use the tax benefit, depending on your situation. Here are a few tips:
– If you’re a first-time home buyer, you may be eligible for a credit of up to $7500. You can find out if you’re eligible by using the IRS Homebuyer Credit estimator. The estimator will tell you how much of the purchase price you can claim as a tax credit.
– If you’re buying a home with someone else, either as part of a joint purchase or as co-owner financing, both you and the other person may be able to take advantage of the tax credit. The credit is available for up to $4,000 per person.
– Buying a home with family members who have helped finance it, they could also be able to claim a tax credit based on their share of the purchase price. This credit is available for up to $8,000 per person.
– Finally, if you’re using borrowed money to buy a home, any of the above credits could apply to your loan amount.
Changes in New Home Construction Taxes
The mortgage deduction limits have changed, and the standard deduction has been raised. These are the primary changes in the tax regulations that you should be aware of. The total mortgage interest rate deduction cap has been cut to $750,000 from $1,000,000 before for new house building deductions.
This has a huge influence on higher-priced residences.
If you’re still looking for a home as a first-time buyer, one thing you should think about is putting more money down when you buy a house. The standard deduction has been doubled, which is the second big tax change to be aware of as a first-time home buyer. Individual filers can now claim up to $12,000, while married couples can claim up to $24,000.
It is expected that this will have a substantial influence on house ownership values. Furthermore, on lower-priced properties, the standard deduction may make the mortgage interest deduction obsolete.
Final Words
Congratulations on your upcoming home purchase! If you are a first-time home buyer, there are many tax credits and incentives available to help make the process more affordable. If you are purchasing your home through a real estate agent or another third party, be sure to ask about any applicable discounts or incentives that may be available.
