First Time Buyer Tax Credits

On February 17, 2009, President Obama signed important housing legislation that revises and extends the tax credit provisions of The Home Recovery Act of 2008, designed to help home buyers and strengthen the housing finance system.

Overview of First Time Buyer Tax Credits

An important part of this legislation is specifically aimed at assisting qualified first time home buyers who have been unable to purchase their own homes due to the recent downturn in the credit market. Here are a few of the important points in the bill relating to this tax credit opportunity.

• A tax credit of 10% of the purchase price of the home up to $8,000 is now available for first-time home buyers only.
• By law, a First Time Home Buyer is someone who has not owned a principal residence during the three years prior to the purchase. If the taxpayer is married, the law examines the history of both the home buyer and the spouse. As an example, if you have not owned a home in the past three years, but your husband or wife has, neither of you qualifies for the first-time home buyer tax credit.
• The credit is available if you purchase your home, new or resale, on or after January 1, 2009 and before December 1, 2009.
• First-time Home Buyer Tax Credits apply to all single-family detached homes. Any home purchased by an eligible first-time home buyer will qualify for this credit as long as it is used as the principal residence and the homeowner has not owned a home in the prior three year period.
• If you are a single taxpayer with an income up to $75,000 or a married couple with incomes up to $150,000, you may qualify for the full tax credit.
• This tax credit is refundable. Even if the tax-payer has little or no federal income to offset, the IRS will issue a check to the homebuyer for the difference of the tax due and the amount of the tax credit.
• This tax credit does not have to be repaid to the government for qualified home purchases on or after January 1, 2009 and before December 1, 2009, if the home is not sold for three years. If the home is sold within three years of the qualifying purchase, the entire amount of the credit will be recaptured upon sale of the home.

Please note that this information is for information only. It should not be used in place of a consultation with your professional tax, accountant, legal or other trained adviser. There are no guarantees of timeliness, completeness or accuracy. You should consult with one of these qualified professionals with all of the facts that apply to your particular situation before making any decision or taking any action as a result of this information.