Tax credits for first-time homebuyers
Credits are available to those who qualify as first-time buyers in either 2008 or 2009, but the rules are different for each year.
If you bought in 2008,
You may be eligible for a $7,500 refundable tax credit! Your home has to be in the United States, has to be your primary residence, and you have to be a “first time homebuyer,” meaning you (or your spouse, if married) haven’t owned a home in at least three years prior to your purchase. You do have to repay the tax credit, but over a 15 year period, so it operates like an interest-free loan. Yeah!
What You Need To Know
The tax credit is equal to 10 percent of the purchase price
of your principal residence, up to $7,500; or $3,750 each
for married individuals filing separate returns.
The tax credit is repaid in equal installments over a 15 year
period. No interest will be charged.
The credit applies to homes purchased after April 8, 2008,
and on or before December 31, 2008.
To qualify, you (or you and your spouse, if married) may
not have had an ownership interest in a primary residence
in the three years prior to the purchase of the home for
which you are claiming a credit – this includes inherited
property if either you or your spouse lived in the property
as your primary residence at any time during the three year
period prior to purchasing your home.
You can claim the credit on your 2008 tax return or, if you
have already filed, you can file an amended 2008 tax return
to claim your credit.
You may not apply for a tax credit if you acquire the home
by gift or inheritance or if you purchased the home from a
relative.
Vacation homes and rental properties do not qualify for the
credit.
The home must be in the United States.
You may not claim the credit upon entering into a contract.
You may only claim the credit after a completed sale and
purchase. The sale and purchase are usually viewed as
complete at the time of closing.
Credit is phased out for single filers making between
$75,000 and $95,000 per year, and joint filers making
between $150,000 and $170,000 per year. Single filers
making more than $95,000 per year and joint filers making
more than $170,000 per year are not eligible for the credit.
The 2008 First-Time Homebuyer Credit is claimed on
Form 5405
If you bought in 2009,
The American Recovery and Reinvestment Act provides an even larger tax credit, and this one doesn’t have to be repaid! If you bought a new home after December 31, 2008, and before December 1, 2009, you can claim a first-time homebuyers credit of up to $8,000, and you don’t have to repay the credit if you stay in the home for at least 3 years after purchase. If you move before the end of the 36 month period, you are required to refund the credit when the income tax is due for the year you vacate the home.
What You Need to Know
The tax credit is equal to 10 percent of the purchase price
of the home or up to $8000 ($4,000 each if married but
filing separately).
The home must be purchased after December 31, 2008,
and before December 1, 2009.
You do not have to repay the credit if you remain in the
home as your primary residence for 36 months after your
purchase date.
To qualify, you (or you and your spouse, if married) may
not have had an ownership interest in a primary residence
in the three years prior to the purchase of the home for
which you are claiming a credit – this includes inherited
property if either you or your spouse lived in the property
as your primary residence at any time during the three year
period prior to purchasing your home.
You can claim the credit either on your 2008 or your 2009
tax return. For a good explanation of how to file your tax
return to maximize the benefit of your 2009 tax credit,
click here.
You may not apply for a tax credit if you acquire the home
by gift or inheritance or if you purchased the home from a
relative.
Vacation homes and rental properties do not qualify for the
credit.
The home must be in the United States.
You may not claim the credit upon entering into a contract.
You may only claim the credit after a completed sale and
purchase. The sale and purchase are usually viewed as
complete at the time of closing.
Single filers making more than $95,000 per year and joint
filers making more than $170,000 per year are not eligible
for the credit. Credit is phased out for single filers making
between $75,000 and $95,000 per year, and joint filers
making between $150,000 and $170,000 per year.
The 2008 First-Time Homebuyer Credit is claimed
on Form 5405
The 2008 and 2009 tax credits for first-time homebuyers are available for a limited time only! Money in the bank, people! For more information on these special tax breaks, visit the official Internal Revenue Service website at IRS.gov.
Source: IRS.gov