Housing Assistance Tax Act of 2008
Property Tax Deduction
In addition to the standard deduction allowed to non-itemizers (those who do not use Schedule A), taxpayers are now allowed to
deduct an additional amount for "real property taxes".
Limited to $500 or $1,000 for taxpayers filing jointly
Does not apply to property located in foreign countries
Deduction is only available in 2008, 2009 and 2010
Refundable Credit for First-time Homebuyers
Rules for homes purchased 4/9/08 to 12/31/08
First-time homebuyers are allowed a refundable tax credit of the purchase of a principal residence equal to the lesser of $7,500 or 10% of the
home's purchase price. For married individuals filing separately, the maximum credit is $3,750.
The credit is phased out for taxpayers
with modified AGI between $75,000 and $95,000 ($150,000 and $170,000 for joint filers).
A “first-time homebuyer” is an individual who had no
present ownership interest in a principal residence during the three-year period ending on the date of the purchase of the principal residence to
which the credit applies. If the individual is married, neither the individual nor his spouse may have had a present ownership interest in a principal
residence during that three-year period.
Taxpayers who claim a first-time homebuyer credit are subject to recapture equal to an increase in tax
for each of the subsequent 15 years beginning with the second year of ownership. The recapture is equal to 6 2/3% of the amount of the credit for each tax
year in the recapture period.
A taxpayer who is liable for the recapture tax for a tax year must file an income tax return for that year, even if not
otherwise required to file.
Find more details on IRS website here
Note: this credit was update and extended by the American Recovery and Reinvestment Act (ARRA).
Find more details on IRS website here
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