First Time Home Ownership Tax Credit

The Federal Government recently created a unique opportunity for home buyers when they passed the Housing and Economic Recovery Act (H.R. 3221). Being government sponsored, this “opportunity” comes along with a few conditional that are important to understand.

Here are 6 things to know and understand:

1. Applies to home purchases after April 8, 2008 and before July 1, 2009. Taxpayers can take the credit on their 2008 tax return if they bought their house this year after April 9.

2. Buyers don’t have to be “first-timers.” The tax credit is available to any individual or household that hasn’t owned a home for at least three years.

3. There are income limits to be able to qualify. The credit is reduced or eliminated for higher-income taxpayers.

4. Think of it as an interest-free loan. The”credit” is to be paid back in small, 6.67-percent increments over 15years, although repayment will be no more than $500 yearly and payments will not start until 2011.

5. No pre-authorization before making a home purchase. Buyers simply have to claim the credit on their IRS Form 1040 tax return and/or any form that the IRS might devise.

6. New-home construction also qualifies. The purchase date is the first date the buyer occupies the home. However,any home that is not a primary residence, such as a vacation home or income property, does not qualify.

You can also visit the IRS web site for their interpretation and other information or contact me directly with your questions.

< Go Back