The Housing and Economic Recovery Act of 2008 authorizes a $7,500 tax credit for qualified first-time home buyers purchasing homes on or after April 9, 2008 and before December 31, 2008.
While this is certainly a great opportunity for first time buyers (particualarly since down payment assistance programs are no longer widely available), it's important to carefully read the details to decide if the taking the credit is right for you. The credit must be repaid over 15 years (making it, in effect, an interest free loan). NOTE - THIS IS NOT THE 2009, HOME BUYER TAX CREDIT FOR $8,000 THAT DOESN'T NEED TO BE REPAID!
For full details: http://www.irs.gov/newsroom/article/0,,id=187935,00.html
H.R. 3221
Housing and Economic Recovery Act of 2008
|
| Amount of Credit |
Ten percent of cost of home, not to exceed $7500 |
| Eligible Property |
Any single‐family residence (including condos, co‐ops) that will be used as a principal residence. |
| Refundable |
Yes. Reduces income tax liability for the year of purchase. Claimed on tax return for that tax year. |
| Income Limit |
Yes. Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000, respectively). |
| First‐time Homebuyer Only |
Yes. Purchaser (and purchaser’s spouse) may not have owned a principal residence in 3 years previous to purchase. |
| Recapture |
Yes. Portion (6.67 % of credit) to be repaid each year for 15 years. If home sold before 15 years, then remainder of credit recaptured on sale. |
| Effective Date |
Purchases on or after April 9, 2008 |
| Termination |
July 1, 2009 |
| Interaction with Alternative Minimum Tax |
Can be used against AMT, so credit will not throw individual into AMT. |
| Source: National Association of Realtors |
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