First Time Homebuyers Tax Credit

Most of us have read several articles about the First Time Homebuyers Credit, but I thought a few points were worthy of highlighting again.

First, the definition of "first time homebuyer" is anyone who has not owned a principal residence in the 3 years previous to purchase. This also applies to your spouse. So if you are newly married and you have not owned a home before, but your new spouse owned a personal residence and sold it last year you would not qualify for the credit.

Second, there are two different First Time Homebuyer Tax Credits. Both are refundable credits which means you can get a refund or credit against taxes even if you did not pay any taxes in to the government. The purchase date of the home determines which credit is applicable. The credit starts being phased out at $75,000 (single) and at $150,000 (Joint return).

Purchases made after April 8, 2008 and before July 1, 2009
This credit is the lesser of 10% of the purchase price up to a maximum of $7500. This credit is actually a 15 year interest-free loan. The first payment would be made as an additional tax on the 2010 tax return. There are several exceptions to the repayment rule in the case of death, divorce, or if it is sold or ceases to be used as your main home. Credit is claimed on the 2008 tax return.

Purchases made January 1, 2009 and before December 1, 2009
This credit is the lesser of 10% or $8000 and this one does not have to be paid back unless the home is sold or ceases to be a personal residence within 3 years of purchase. Taxpayer can elect to claim this credit on their 2008 tax return.

As always you should check with your tax professional.

Look for more tax tips next week.

Laura Roussel
EXIT Realty Arkansas & Oklahoma
www.ExitArOk.com