Home buyers have gotten a real boost from the government, but you better get started soon. The tax credit of $7,500 for ‘first-time home buyers’ ends July 1, 2009. The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For the purposes of the tax credit, the purchase date is the date when closing occurs, so it’s important to find the right home at least 60-90 days in advance to ensure that you meet the deadline. Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit. The tax credit works like an interest-free loan and must be repaid over a 15-year period.
Partial credits of less than $7,500 are available for some taxpayers whose income exceeds the limits. The credit becomes totally unavailable for individual taxpayers with a modified adjusted gross income of more than $95,000 and for married taxpayers filing joint returns with an AGI of more than $170,000. The credit is refundable meaning that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.
For more information about the home buying tax credit for first time home buyers visit the National Association of Home Builders website for ‘First Time Home Buyers’ or visit the IRS website ‘Tax Credit to Aid First Time Home Buyers’
