FIRST TIME HOMEBUYER CREDIT

This blog is to help explain the facts on the $8,000 First-Time Homebuyer Credit program established in 2009.


In an effort to stimulate the economy and the housing market, Congress enacted the American Recovery and Reinvestment Act of 2009. This Act authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009, and before December 1, 2009. The previous $7,500 tax credit applies to all qualified first-time home buyers purchasing from April 9, 2008 to July 1, 2009 (new 2009 revisions are now in effect). Below are the aspects of this new Act.


First Time Homebuyer Only - The tax credit is for first-time homebuyers only. "First-time" is defined as a buyer (and spouse) who has not owned a principal residence during the three year period prior to the purchase. For example, if you plan to own on a home on November 17, 2009, you can qualify as a "first-time" homebuyer if you haven't owned a principal residence/home since Novemember 17, 2006.


Refundable Amount of Credit - The tax credit is equal to 10% of the home's purchase price and maxes out at $8,000. For example, a $50,000 home purchase price will qualify for a $5,000 credit (10% of $50,000). A home price of $200,000 or more will qualify for the max of $8,000 credit.


Repayment/Recapture - The 2009 $8,000 tax credit does NOT have to be repaid on any purchase on or after January 1, 2009, and before December 1, 2009, as long as you use the home as your principal residence for 3 years. Basically, when you file your 2009 taxes in 2010, you will receive a cash refund on your taxes of up to $8,000. Some restriction do apply, for example: if you sell your home within 3 years of purchase, you will have to repay the entire tax credit amount at closing. See IRS form 5405 for details on the exceptions.


To Learn more about the details of this program, and to see if you might qualify, Click Here.