Tax Credit for First Time Homebuyers

The passing of the Housing and Economic Recovery Act of 2008 contains some significant benefits for first time homebuyers, which has increased the number of reasons why it is a great time to buy a home. In addition to having a variety of inventory to choose from, the law’s new repayable first-time home-buyer tax credit is a great incentive to buy now.

To qualify for the home-buyer tax credit, you must be a U.S. citizen and purchasing for the first time or must not have owned a property in the last three years. Your income can not exceed $75,000 for an individual or $150,000 for a couple filing jointly. If you meet these qualifications, you can get a tax credit equal to 10 percent of your home’s purchase price, up to $7,500. In addition, your home purchase must be made between April 9, 2008 and July 1, 2009.

Any home qualifies for the credit, provided that it will be used as a principal residence and the buyer has not owned a home in the previous three years. This includes new and existing single-family detached homes, attached homes like townhouses and condominiums, manufactured homes and houseboats.

Participating in the program is easy and no pre-approval is necessary, just be sure you meet all the qualifications. Then, simply claim the credit on your tax return. The credit can be claimed on your 2008 tax return even if the purchase is made in 2009 (Important Note: this is a tax credit and not a tax deduction and in most circumstances will be recaptured over time).