First Time Homebuyer Tax Credit 2008 and 2009

So you're wondering whether or not you can get this $8000 tax credit. Do you qualify as a first time homebuyer, if you've not been paying a home mortgage for 3 or more years? How does this tax credit differ from what was offered last year? Consider speaking with your tax accountant about how this tax credit may or may not benefit you.

There is a table that summarizes both the 2008 and 2009 tax credit details. The tax credit is only good for a homebuyer's primary residence (no investments nor second homes). A first time homebuyer is someone who has not been paying a mortgage on their primary residence for the previous three years nor has been married to someone who is paying a mortgage for their primary residence during the previous three years. People earning less than $75,000/single person or $150,000/joint tax return couple are elibigle. The benefits phase out for singles earning up to $95,000 and couples earning up to $170,000.

In a nutshell, for April 9-Dec 31, 2008 buyers, the credit is really a loan. The maximum a homebuyer can get is 10% of the home price, up to $7500. Then, from 2010-2025 the homeowner will pay back a prescribed portion of the credit in their taxes. If the 2008 homebuyer sells the home before 2025, the unpaid balance of the benefit must be paid back then. If the 2008 homebuyer got help with bond money to pay the downpayment or loan closing costs, then they do not qualify for the tax credit.

Changes for homebuyers from Jan 1-Nov 30, 2009 remove the annual payback requirement, increase the maximum amount to $8000, allow homebuyers using bond money to qualify for the tax credit. But, if the 2009 homebuyer sells the home within 3 years, then the full tax benefit is due back to the government, "recaptured", at time of sale. So if 2009 homebuyers stay put for 3+ years, they don't have to pay back the amount! If the do move earlier, they have an additional payoff to cover.

Furthermore, did you realize that whether you are applying for the 2008 or 2009 tax credit, you can file an amendment to your taxes now? That's right, people purchasing from Jan 1-Dec 1 2009 may claim the tax credit THIS YEAR! The tax form to fill out is simple, but you would be wise to verify with your accountant exactly how this benefit will impact you.

Call Beth at 303-796-1238, if you wonder how to make this work for you.