Louisville Real Estate News : How the $8000 Tax Credit applies to First Time Home buyers in Louisville

Background

As a result of the 2009 Economic Stimulus Package, Louisville first time home buyers have an opportunity to purchase a home and get FREE money.  In order to stimulate the housing market, the House and Senate improved the $7500 refundable tax credit by increasing the dollar amount to $8,000 and eliminating the repayment requirement.

Definitions - US Government Dictionary

First Time Home buyer

Anyone who has not owned a primary residence home in the last 3 years.  If you had 47 Louisville homes earlier in you life, but sold them all prior to 2006 and rented since then, you are a First Time Home buyer and are eligible for the credit.  If you have 63 vacation homes, but no primary residence in the last 3 years, you are a First Time Home buyer. 

Not a First Time Home buyer

If your spouse owned a home in the last 3 years, you do not qualify regardless of whether you even knew them at the time.  As an aside, if you are engaged be careful trying to convince your partner to delay the wedding in order to buy a home and get the credit.  While this is legal, the medical bills could easily exceed the tax credit if not approached correctly.

If your Modified-Adjusted Gross Income (MAGI) exceeds $95,000 as an individual or $170,000, you are not a First Time Home buyer even if you have never owned a home.

Home

Your primary residence.  This can be a house, condo, town home, mobile home, or houseboat. 

Refundable Tax Credit

The money is applied to your tax return even if you owe less than the amount of the credit.  For example, if you owe $1000 in taxes and are eligible for the $8000 tax credit, the IRS will send you a check for $7000. 

FAQS

Free Money!!? How do I get mine?

1. Meet the criteria defined above.
2. Buy a home in Louisville or the surrounding areas.
3. Use this home as your primary residence.
4. File your taxes.  (Use Form 5405)
5. Wait. 

Do I really get $8,000? 

• You get 10% of the purchase price of the home or $8000 whichever is less. 
• If your MAGI is between $75,000 and $94,999 as an individual or $150,000 and $169,999 as a couple the credit is pro-rated.  I'd explain, but this post is going to be too long already.  Call me or your accountant.

And I don't have to repay the Tax Credit?

Not unless you sell you home within 3 years.  If you are concerned about the possibility of moving, etc within that time, I'd avoid cashing the check at Churchill Downs.  (For that matter, I'd avoid the S&P 500 as well).

I want to buy a Louisville home, but don't have enough money for a downpayment.  What can I do?

The $8000 tax credit can be earned even if you use KHC (Kentucky Housing Corporation) or RHF (Rural Housing Fund) money to assist with the downpayment.  Note that income restrictions for KHC or RHF money are lower than those for the credit.  If you are an individual making $60,000 and don't have 3.5% to put down, you are going to have to beg, borrow, or steal it from somewhere else.  While you are figuring out how to do this, you should consider developing a budget.

I bought a Louisville home earlier this year and filed for the $7500 tax credit.  Can I get $8000 tax credit instead? 

The short answer is YES.  The longer version is that the procedure hasn't really been worked out yet.  The most likely scenario is that you should file an amended return.  Talk to your accountant.

I bought a Louisville home in 2008 and filed for the $7500 tax credit.  Can I get the $8000 tax credit?

No.  The $8000 tax credit only applies to purchases on or after Jan 1, 2009.

That's not fair.

Really?  The government is giving you a 15-year, zero-interest loan and you are complaining??  As my dad used to inform me on a regular basis, "Life's not fair.  Deal with it."  By the way, those who bought a home before April 9th, 2008 don't get anything so don't complain too loudly.

What else do I need to know?

The $8000 first time home buyer credit expires on November 30th, 2009.  If you have a contract on a house, but have not closed by Tuesday December 1st, you are out of luck.  You should allow 4-5 weeks between contract and closing when buying a home in Louisville.  My guess is that many people will procrastinate and try to squeeze a closing in at the last minute.  Louisville title attorney's will be swamped and some deals will not make it to the table in time.  Act now while rates are low, prices are fair, inventory is high, and you are sure to get the credit. 

How do I proceed?

Call, txt (502-921-3989) or email me and I will be glad to help.

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Erik Hitzelberger is a licensed real estate agent with RE/MAX Alliance in Louisville. If you need a Louisville Real Estate agent please email me or call 502.921.3989.

I specialize in the following areas of the Metro Louisville Area: Jeffersontown (J-Town), Okolona, Fern Creek, Shepherdsville, Mt Washington, Hillview, Brooks and Pewee Valley.  Click the following links to learn more about Louisville and Bullitt County Real Estate or to Search for Louisville Homes.