First Time Home Buyer Tax Credit

You've probably heard a lot about a tax credit of $8,000 for purchasing your first home. So what are the specifics?

First and foremost, anyone looking to take advantage of this First Time Home Buyer Tax Credit should seek the assistance of a tax professional. This author is not a tax professional and this is only my interpretation of the basics on how the tax credit works.

That being said here are few points to consider.

What it is;

A tax credit of 10% of a home's purchase price up to a maximum of $8,000. It is a tax credit meaning you must purchase the home before you are able to claim it.

Timeframe;

You must purchase a home before December 1, 2009

Do you qualify;

You must be a First Time Home Buyer meaning you can't have owned real estate within the previous three years. In addition you have to fall within the income limits of $75,000 AGI if filing single and, $150,000 AGI if filing jointly to qualify for the full credit.

Do you have to repay;

If you live in the home for the first three years of ownership you will not be required to repay the credit.

When can you claim it;

You can claim it on your 2008 Tax Return or 2008 Amended Tax Return if you've already filed. You can also claim it on your 2009 Tax Return.


Obviously the tax credit is a hefty incentive to purchase a home this year. To take advantage of what essentially amounts to "free" money you should seek the advice of a tax professional and a mortgage professional so you can get to the bottom of just how much you can expect to receive and what you can afford. With rates in the mid 5.00% range, prices lower than they've ever been and the limited time frame for the tax credit First Time Home Buyers are in a better position than ever to take the leap.

- Andrew