First Time Home Buyer $8,000 Tax Credit

Latest First-time Home Buyer Tax Credit Update for September 2009 CLICK HERE

In February, the economic stimulus package known as the “American Recovery and Reinvestment Act of 2009″ was signed into law by President Obama. The Act includes provisions intended to revitalize the housing market, while the U.S. Treasury Department’s plan to help mitigate foreclosures and encourage new lending also targets a housing recovery.

The American Recovery and Reinvestment Act of 2009 offers an $8,000 tax credit for first-time buyers who purchase a home on or after January 1, 2009, and before December 1, 2009. Unlike previous tax credits for first-time buyers, this one doesn’t have to be repaid.

Details of the tax credit include:

• The temporary credit is only available for home purchases made from Jan. 1, 2009, through Nov. 30, 2009, and is equal to 10 percent of the cost of the home, up to a maximum credit of $8,000. (For example, a home  purchased for $80,000 or more would qualify for the full $8,000 credit while a $70,000 home would only qualify for 10 percent, or $7,000.)

• Buyers claim the credit on their federal tax return to reduce their tax liability. If the credit is more than the taxes owed, the buyer will get a refund check for the taxes owed plus the difference.

• Only first-time homebuyers can take advantage of the tax credit. A first-time buyer is defined under the tax credit as an individual who has not owned a home in the past three years. Eligible properties include anything that will be used as a principal single-family residence – including condos and townhouses.

• There are income guidelines on the credit. Individuals with an adjusted gross income up to $75,000 (or $150,000 if filing jointly) are eligible for the full tax credit. The credit is phased down for those earning more and is not available for those with an income above $95,000 ($170,000 if filing jointly).

• The new tax credit does not have to be repaid if the buyer stays in the home at least three years. If the home is sold before that, the entire amount of the credit is recaptured on the sale.

To read more about the First Time Home Buyer Tax Credit and how it may affect purchasing a property in the South Walon Area please click here to download a detailed pdf of the Tax Credit.

Additional Resources

2009 First-time Home Buyer Tax Credit IRS Form 5405 (PDF)