Hello Edith: I was a first time homebuyer in May 2008 and I was wondering if I qualified for the $7,500 tax credit that I read about in your column. This individual said he purchased his house on April 8, 2008 and he was one day shy of being eligible for the credit. Does this mean he was too early or too late? -- L.B.
Answer: He was one day too early, but you qualify.
The federal income tax credit is available for first-time homebuyers who bought on or after April 9, 2008. It is scheduled to expire July 1, 2009. Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full credit.
This is really an interest-free loan, intended to make things easier for cash-strapped homebuyers. If you take the credit on your tax return, you'll be obligated to repay it at the rate of $500 a year for the next 15 years.
For more details, you can try the Web site http://www.federalhousingtaxcredit.com/.
Profit On The House
Dear Ms. Lank, my wife and I had a house built in Syracuse in 2004 for $177,000. Houses in our development have recently sold in the $225-250,000 range. If we sold for about that, what would our capital gains tax be? We are both 50, and have invested about $25,000 in upgrades (driveway, fence, landscaping, etc.). We may be relocating and not purchasing another home. -- F.G.
Answer: It's a pleasure to receive a question about profit on a sale. These days most of my e-mail looks quite different.
Your ages don't have anything to do with the current tax break for home sellers. It no longer matters whether you buy a replacement residence. Because you will own and occupy your home for more than two of the five years before you sell, you and your wife can take up to half a million-dollars profit free of any federal capital gains tax.
They're Also Aging
Dear Edith: Our house is 50 years old and, even though our kitchen has had some updates, the cabinets are original. The original kitchen had built-ins and as a result we have a smaller refrigerator. In a few years we will have to sell as we are also aging. Should we have new cabinets installed or should we leave it to the new owner? How does this affect our selling? I did hear someone say she would rather do the kitchen her own way. -- Via e-mail
Answer: There's no one right answer. As so often, it all depends.
Where are you located? What are price levels in your neighborhood? How does your home compare with its neighbors? What quality were the original cabinets? Do they have architectural value? What condition are they in? Would you also need to re-do the counters?