First-Time New Purchase Home-buyer Tax Break for 2012
Tax deductions and credits to claim are lurking everywhere! Some we hear about too late, like the first time new purchase homebuyer tax break.
What is it?
Back in 2008 this tax credit came into being and it stated: that for homes purchased after April 8th, 2008 and before January 1, 2009 you would have been eligible for a tax credit of up to $7,500. Sounds like small potatoes right? Though every single dollar counts, small potatoes may remain an accurate description. Originally the credit amount was supposed to be repaid over the course of 15 years.
Later the first time purchase new homebuyer credit was expanded to $8,000 dollars and the repayment rules were reconfigured. This is when it became refundable. That means that if your tax liability in the year you took the credit was less than $8,000 then the IRS would be sending you a refund for the difference.
There are some exceptions to repayment: If the home was sold to a person not related to you, then the repayment (for the year of the sale) is limited to the amount of the gain on the sale. If the home was destroyed or condemned then you will continue to make repayments If there is a divorce and the ownership transfers to a spouse, they will be responsible for repayment Good news if you should die, the annual payments will not be due. Though a spouse would be required to pay "their half" of the repayment amount.
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