First Time Homebuyer's Tax Credit
You could receive $8,000 as a tax credit when you purchase your first home! In 2008 Congress created a $7,500 First-Time Homebuyer Tax Credit. It went into effect April 8th, 2008 and was set to expire July 1st, 2009. The problem was it had to be repaid over 15 years, and most viewed this as a debt and not a benefit. NAR began advocating to remove the repayment feature and to extend the credit to the end of 2009. The repayment requirement was successfully removed for 2009 as well as the credit was extended to November 30th, 2009 and can be claimed by those who closed homes on or after January 1st, 2009. The credit was also expanded to $8,000.
Who Qualifies for the Tax Credit?
A first-time homebuyer is defined as someone who has not owned a main home at any time during the three years prior to the date of purchase. Form married joint filers, both must meet the first time homebuyer test to take the credit on a joint return.
The home must be the principal residence. It can be a condo, single family detached, co-op, townhouse or something similiar. The home must be located in the United states (vacation homes are not eligible.) If the home is sold prior to three years of ownership, the tax credit must be repaid. This is to prevent flipping homes in order to receive the credit. You can claim the credit on your 2008 tax return.