First-Time Home Buyers tax Credit

This new federal law provides a tax credit up to $7,500 for qualified first-time home buyers.

First-time home buyers are defined as those who have not owned a home for at least three years.

To qualify, the closing and transfer of title on the home must occur on or after April 9, 2008 and before July 1, 2009.

The credit is claimed when income tax returns are filed.

To receive the full tax credit, the income limits are $7,500 for a single tax payer and $150,000 for married taxpayers filing joint returns.

Yes, there is a payback.

View the tax credit as an interest free loan with up to 15 years to pay it back.

A snapshot of the provisions:

Qualifications. The tax credit is available for first-time home buyers, which under the Act also includes people who have not owned a home for at least three years.

Income limits. The credit can be as much as $7,500 but is decreased depending on how much money the potential home buyer makes. To receive the full tax credit amount the income limits are $75,000 a year for single tax payers and $150,000 for married taxpayers filing joint returns. For partial credit the upper limit is $95,000 and $170,000 respectively.

Time limits. To qualify, a home purchase must occur on or after April 9, 2008 and before July 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs - the date when title transfers.

The way credits work. Qualified home buyers claim the credit when they file their income tax return - no additional application or certification is required. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. A taxpayer who owes $7,500 in income taxes and who receives a $7,500 tax credit would owe nothing to the IRS.

Payback. You can look at this tax credit as an interest free loan with up to 15 years to pay it back. For example, a home buyer claiming the full $7,500 credit would repay the loan at a rate of $500 a year. There are exceptions, of course, but all that is explained on the Web site.


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