Congress has enacted a revised tax credit for the first-time homebuyer. The previous tax credit allowed homebuyers who purchased their home after April 9, 2007 and before January 1, 2009, $7,500, which was to be paid back over 15 years, interest free.
The new tax credit is available to first time homebuyers if they purchase between January 1, 2009 and before December 1, 2009. This $8,000 is not a loan and DOES NOT have to be paid back. It is a refundable credit given and it is up to 10% of the home’s purchase price. Unlike popular belief, this is not a check given at closing but a write off at the end of the year.
TO QUALIFY FOR THE TAX CREDIT:
- You must be a first-time homebuyer. A first-time homebuyer is someone who has never owned a home or has not owned a home for at least three years. If you are married, both parties will have ownership history checked.
- As an individual purchasing the home, your income can not exceed $75,000. Married couples filing a joint return can not exceed $150,000.
- The home must be a primary residence and it includes: single family homes, townhouses, condos and manufactured homes.
- You must finalize the sale between January 1, 2009 and December 1, 2009.
This credit, along with the low interest rates and decreased value of homes, makes it a wonderful time for first time homebuyers. To claim the credit complete IRS Form 5405 this will determine the tax credit amount, and then claim this amount on Line 69 of your 1040 income tax return.
