What Is First Time Homebuyer Tax Credit?
First time Homebuyers who purchased a new or existing home between April 9, 2008 and July 1, 2009 may be eligible to claim a $7,500 tax credit on their 2008 tax returns.You are considered a first time homebuyer if you have not owned a principal residence within the last three years. For married couples neither party may have owned a principal residence in the last three years to be eligible for the credit. Vacation and rental homes do not necessarily disqualify you for the credit.
Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. No other applications or forms are required. No pre-approval is necessary; however, prospective home buyers will want to be sure they qualify for the credit under the income limits and first-time home buyer tests.
Home buyers will be required to repay the credit to the government, without interest, over 15 years or when they sell the house, if there is sufficient capital gain from the sale. For example, a home buyer claiming a $7,500 credit would repay the credit at $500 per year. The home owner does not have to begin making repayments on the credit until two years after the credit is claimed. So if the tax credit is claimed on the 2008 tax return, a $500 payment is not due until the 2010 tax return is filed. If the home owner sold the home, then the remaining credit amount would be due from the profit on the home sale. If there was insufficient profit, then the remaining credit payback would be forgiven.
You will have the ability to claim the tax credit on your 2008 tax returns even if your new home purchases occurs in 2009 provided you close before July 1, 2009.
There are some income limitations and tax credit limitations involved with this. I would be more than happy to speak with you about these, but for exact information I would consult with your tax preparer.
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