First Time Home Buyer Tax Credit Explained

In an effort to stimulate the economy and get the housing market moving, Congress has created a tax credit program that grants first time home buyers up to $8000.house and contract

Qualification:

If you are a first-time home buyer who purchases a home between January 1, 2009 and December 1, 2009. You and your spouse cannot have owned a home in the three years prior to the purchase.

Eligibility of Homes:

The 2009 First-Time Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

Determining the Amount of the Credit:

Each home buyer’s tax credit is determined by two factors:

  1. The price of the home—the credit is equal to 10% of the purchase price of the home, up to $8,000.
  2. Your income—single buyers with incomes up to $75,000 and married couples with incomes up to $150,000—may receive the maximum tax credit.

The maximum allowable credit for is $8,000.  The credit decreasesif you earn between $75,000 and $95,000 for single buyers and between $150,000 and $170,000 for home buyers filing jointly. The amount of the tax credit decreases as your income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $95,000 for singles and over $170,000 for couples are not eligible for the credit.

Repayment of the Credit:

Repayment will be required if you occupy the home for less than three years, the money will be collected when the house sells.  If you live in the home for longer than three years the 2009 First-Time Home Buyer Tax Credit will not have to be repaid.