First Time Homebuyer Tax Credit

The home purchase market is heating up and Real Finance Solutions is dedicated to bringing you value added information for you to share with your clients.

One of the most exciting provisions of the Housing and Economic Recovery Act of 2008 was the First-Time Homebuyer Tax Credit. The credit was expanded as part of the most recent economic stimulus bill (The American Recovery and Reinvestment Act of 2009). The credit is designed to encourage first time home buyers to go ahead and make the leap to purchase their first homes. Combine this tax credit with the fact that home prices and interest rates are at historical lows, and it is indeed an ideal time for many first-time homebuyers to purchase a home!

Here are some things to keep in mind:

• A first time home buyer is defined as someone who has not owned a home in the last three years


• Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit


• You cannot purchase the home from a related party like a spouse, direct ancestor, or direct lineal descendent (child or grandchild); however, you can still qualify for the credit if you purchase a property from siblings, nephews, nieces, and others


• If you are married, both spouses must be first-time home buyers


• If more than one unmarried individual is buying the property, the credit can be split up among all the individuals who qualify. However, the total credit taken cannot exceed $8,000 for homes purchased in 2009.
  

For Homes Purchased Between January 1, 2009 and December 1, 2009:

• The credit amounts to 10% of the purchase price of the home not to exceed $8,000.


• The tax credit DOES NOT need to be paid back if you continue living in the home as your primary residence for three (3) years without selling it.

Real Finance Solutions provides this information as reference only and does not intend to offer tax advice. It is good practice for Residential Finance Specialists to refer your clients to a qualified tax accountant for appropriate counsel.