First Time Homebuyer Tax Credit Explained
Note that this information is outdated.
1. How much is the tax credit? A: The maximum credit amount is $8000 or 10% of the cost of the home.
2. What type of property is eligible? A: Any single family residence (including condos, co-ops, townhouses) that will be used as a primary residence.
3. Is it a tax credit or tax deduction? A: It is a tax credit. A credit reduces taxes owed after all standard deductions are calculated.
4. Is there a limit depending on income? A: Yes. The full amount of credit is available for individuals with adjusted gross income of no more than $75,000 ($150,000 for a joint return.) It phases out above those caps ($95,000 and $170,000).
5. Who qualifies as a first-time buyer(s)? A: Anyone who has not owned or purchased a primary residence in the last three years is considered a first-time buyer in this program.
6. Can the buyer receive the credit if they're financed with state or local bonds? Yes.
7. Does the buyer have to repay the credit? A: The buyer(s) must live in the home for at least three years. If less than three years, then the credit must be repaid.
8. When does the tax credit program begin? January 1, 2009. When does the tax credit program end? December 1, 2009.
9. How do homebuyers claim the tax credit? A: Participants claim the tax credit on their federal tax return. Then the homebuyer would enter the $8000, or 10% of the home's cost, as a tax credit. This reduces any taxes owed or increases the refund to the homeowner.