Not all qualify for first-time home buyer tax credit

Buyers expecting to get the first-time home buyer tax credit should check the fine print. They may not qualify.

After closing on his first home earlier this week, 83 year-old Alget Campbell got some disappointing news Thursday: He would not qualify for the first-time home buyer tax credit.

The fine print of the tax provision, which gives a credit of up to $8,000 to buyers who have not owned a home in the last three years, disqualifies individuals whose spouses have owned a home during that same period.

Michael Dobzinski, a spokesman for the Internal Revenue Service, said there are plenty of misconceptions about the so-called first-time home buyer tax credit so it always pays to be familiar with the details before buying.

In Campbell's case, his wife, Hermine, owns the home in Southwest Miami-Dade County the couple has occupied and plans to rent out to cover the mortgage on the townhome they bought for some $71,000 on Monday.

Joan Grant, Campbell's daughter who helped him through the home buying process, said she was disappointed that her father, a former Publix clerk, would not be getting the credit.

"We were hoping for that, but it's kind of late now to worry about it,'' Grant said. "I was hoping that he would get it since he is actually buying this on his own.''

Marcia Pennant, Campbell's real estate agent, said she had told the couple she was not sure they would qualify, but to consult their tax advisor.

Dobzinski, of the IRS, said to get the credit, an individual or spouse cannot have owned a home three years prior to the date of the new purchase.

Also, to keep the credit, homeowners must use the home as their primary residence for three years.

In addition, the purchase must occur on or after Jan. 1 of this year, but before Dec. 1.

The tax credit is equal to 10 percent of the purchase price of the home, up to $8,000. So, had Campbell qualified, he would have gotten a roughly $7,100 credit.

Dobzinski said people often think they will get the tax credit instantly when, in fact, it requires them to either amend their 2008 tax return or wait until they file for 2009. Because it is a tax credit, a buyer who owed no taxes would get a check of up to $8,000.

If taxes are owed, the credit could knock up to $8,000 off the bill.

The credit is phased out for single filers with a modified gross adjusted income of more than $75,000 a year and married couples filing jointing with incomes above $150,000.

Dobzinski said home buyers should consult with their tax advisor to determine whether they qualify. They can also visit www.irs.gov or call the IRS at 800-829-1040.

BY MONICA HATCHER
THE MIAMI HERALD
SEPTEMBER 2009

Beth Brown, P.A., GRI, ABR
Coldwell Banker
550 Fifth Ave S.
Naples, FL 34102
Cell 239-250-2408
Fax 1-866-814-2967
BethBrownRealtor@comcast.net
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