Healthcare Traveler - October 2008 - (Page 59) Tax Facts Joseph Smith ISSUES AND ANSWER S FOR TR AVELER S What is the “new home buyers credit?” I f you want to buy a new house, you may be eligible for a $7,500 tax credit, thanks to the recently passed American Housing Rescue and Foreclosure Prevention Act (HR 3221). Here’s the scoop. Rules to live by First, even though it’s called a tax credit, it’s really an interest-free loan that must be paid back within 15 years or when you sell the home—whichever comes first. Second, you must be a “first-time home buyer.” That means you or your spouse cannot have owned a home in the past 3 years. Third, time is short. The credit is only available between April 9, 2008, and July 1, 2009. Finally, it is limited to singles with income of $75,000 or less (or a combined income not in excess of $150,000 for a joint return). After that, the credit phases out. Circle Career Card No. 642 What to expect If you are eligible for the credit, you can choose to claim it on either your 2008 or 2009 tax return. Two years later, you will begin payback. Should you sell the home at a profit later on, the credit must be paid that year up to the gain you recognized on the sale. If you sell it for a loss, the credit is forgiven. The next step The most favorable way to use this credit is to buy the home this fall. That way, you will have a nice refund with a few months to help with furnishings, improvements, or even pay down other debt. One note of caution—withdrawing money from an IRA may increase your gross income and reduce the credit. So be sure to talk to your tax advisor first. HT Any tax advice contained is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions. Joseph Smith, RRT, EA, is an enrolled agent and owner of TravelTax LLC (TravelTax.com), based in Norfolk, Nebraska. October 2008 Healthcare Traveler 59 http://www.rndemand.com http://www.itkbeauty.com/ http://www.itkbeauty.com/ http://www.TravelTax.com
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