The Federal Government has provided a $6,500.00 tax credit for property owners that wish to upgrade their current residence provided that you have lived in the residence for at least 5 five consecutive years out of the last eight years.
This would then allow you to sell your existing home to a first time homebuyers thus allowing them to receive an $8000.00 credit to assist them in purchasing your existing home. The true benefit of this program is that you are able to receive benefit of both programs to ensure that you receive the maximum value for your existing home. Neither of these programs requires that either party has to repay the $8000.00 credit or the $6,500.00 tax credit provided that you as well as the purchaser of your existing home use the new property as your primary residence for a period of thirty six (36) months after their date of purchase.
The $6,500.00) tax credit program is quite simple, you the buyer will receive a tax credit of up to ten percent of the purchase price or a maximum of $6,500.00 as a credit on your 2010 return, provided that your new home has a final sale price of $800,000.00 or less. This program went into effect on November 6, 2010 provided that you have your new property under agreement on or before April 30, 2010 as well they settle on your new home prior to June 30, 2010 to be able to qualify for the $6,500.00 tax credit.
Also to qualify the purchaser cannot have an income greater than $125,000.00 dollars as non-married purchaser or $225,000.00 for married purchases that file a joint tax return.
To assist you in understanding how you will benefit from this program directly I would like to explain what a tax credit is as well as how it is applied. A tax credit is a dollar for dollar reduction in what you owe as a tax payer; this means that if you owe 6,500.00 to the IRS and you qualify under this program you would receive a 6,500.00 credit thus leaving you owing the IRS nothing.
To better explain the deduction is subtracted from the amount of income that is taxable, using the above example assume that you are in a 15% tax bracket and you owe 6,500.00) in income taxes. If you the taxpayer received on $6,500.00 deduction rather than a tax credit, your tax liability would only be reduced $975.00 or 15% of $6,500.00 thus being lowered from the $6,500.00 to $5,525.00.
The true benefit of program for first time homebuyers is that the unused portion of the credit is refundable to the purchaser. This means that you as the first time homebuyer can claim their credit even if you have little or no federal income tax liability to offset.
This typically involves the IRS giving you the homebuyer a refund check for a portion or even all of the $6,500.00 credit. So it is very easy to see how this program can be beneficial to you as you upgrade your primary residence.
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