Ask Mike Your Mortgage Questions: WHAT IS FIRST TIME HOMEBUYERS TAX CREDIT - $8000.00?

On Tuesday, February 17th, 2009, the American Recovery and Reinvestment Act of 2009 was signed, authorizing an $8,000 federal tax credit for qualified first-time home buyers purchasing a home on or after January 1, 2009 and before December 1, 2009. The following questions and answers (FAQ's) are designed to provide you with general guidance regarding the segment of the Act that deals with the new Tax Credit:

Who is eligible to claim the $8,000 tax credit?

First-Time homebuyers purchasing any type of owner-occupied home are eligible for the "tax credit". To qualify, a home must be purchased on or after January 1,2009 and before December 1, 2009. The purchase date is considered the closing date.

What is the definition of a "first-time home-buyer?

"The new law defines "first-time home-buyer" as a buyer who has not owned a principal residence during the three-year period prior to purchase.

Do I have to repay the tax credit?

No. If the taxpayer lives in the home as their principal residence for a minimum of three years, there is no repayment. If the taxpayer fails to live in the property for the three year period, the entire amount of the tax credit is recaptured upon sale of the property.

If the home is modestly priced, is the tax credit still $8,000?

Generally, for home buyers purchasing a home priced less than $80,000 the tax credit is equal to 10% of the purchase home price. Therefore, a first-time home buyer purchasing a home for $65,000 would receive a $6,500 tax credit.

Please call Mike at 317-437-5182 for the details.

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