User:Louconsumersource/2009 First Time Home buyer tax credit

The federal government, in attempts to entice buyers into investing in the real estate market, has included the 2009 First Time Home Buyers Tax Credit in the American Recovery and Reinvestment Act of 2009. Not to be confused with the 2008 tax credit, the 2009 offers more benefits than its predecessor.

The maximum credit amount has been increased from $7,500 last year to $8,000 this year. The amount given is determined by 10 percent of the cost of the home. For those seeking to purchase a home under $80,000 then they will receive a credit based on the actual amount and a home over $80,000 the maximum awarded is $8,000.Eligibility for the tax credit is from January 1, 2009 to December 1,  2009. Home buyers must have closed on their home between these dates.

To qualify, buyers must be purchasing their first home for principal residence. Principal residence means the credit will not apply for a second home or vacation home. The purchaser, as well as their spouse can not have owned a principal residence in three years previous to their current purchase. This means you could have previously owned property but not a primary residence within the three year time frame. Also, those using revenue bond financing can use the credit, unlike last year where no credit was given if state or local bond funding was involved.

The credit, in its entirety will be recaptured on the sale of the home if sold within three years of purchasing the home and receiving the tax credit. Take note that after this period the credit will not be recaptured in the event of sale.

If the home is purchased on or after January 1, 2009 or before December 1, 2009, there is NO repayment of the tax credit. The 2008 tax credit required new home buyers to repay the credit each year with their tax filing for a period of 15 years. This is one of the most beneficial changes to getting new buyers in the market. No repayment!

References

Internal Revenue Service

New Home Buying