Singles Qualify For Full $8,000 Tax Credit
Its good news for people who are single, divorced, or widowed: They get the same income tax credit when buying a home as married couples do.
The American Recovery and Reinvestment Act of 2009 authorizes a tax credit for up to $8,000 when you purchase a home before December 1 of 2009. Whether the buyer is an individual or a married couple, they qualify for the same amount.
One exception: If the buyer is married and buying a home as an individual, that person only gets a $4,000 tax deduction.
Couples qualify for the tax credit if they have income of $150,000 or less. A single buyer has to have income of $75,000 or less. If their income is higher, they get only a percentage of the $8,000 tax credit.
Other provisions of the Act: First, you have to be a first-time buyer. If you haven't owned a home in three years, you qualify as a first-time buyer.
Second, the amount of your credit depends on the price you pay for the home. The credit is 10 percent of the price up to $80,000. If you buy a place for $50,000, for example, you would get a tax credit of $5,000.
If you buy a house for more than $80,000, you will get the $8,000 tax credit rather than 10 percent of the purchase price. You get the tax refund right away when you buy. You don't have to wait until you file your 2009 income tax return to get a tax credit and refund. You can file an amended 2008 return and claim the credit now.
The Act can also help you save money to buy a home. If you are certain that you will buy before December 1, 2009, you can reduce or eliminate withholding taxes from your paycheck. Save that amount toward your down payment and file a new W-4 at work.