If you’ve been considering buying your first home, there probably hasn’t been a better time than now, and there may not be again for some time. Many first-time homebuyers are now eligible to receive up to $8,000 in a tax credit, a hefty amount courtesy of President Obama’s American Recovery and Reinvestment Act signed into law last Tuesday.
In a recent press release, IRS Commissioner Doug Shulman said, “This year for first-time homebuyers, this special feature can put money in their pockets right now instead of waiting another year to claim the credit… This important change gives qualifying homebuyers cash they don’t have to pay back.”
The change Shulman is referring to is the $7,500 credit that was already available to many homeowners under the Bush Administration’s Housing and Economic Recovery Act of 2008. Under Bush’s plan, the credit was essentially an interest-free loan, repayable within 15 years. period. Under Obama’s restructured tax credit plan, the tax credit is increased by $500, and this does not have to be repaid.
Along with the increased tax credit comes a list of qualifying requirements. These tax credit provisions include:
o Available only to first-time homebuyers, which includes buyers who have not owned a primary residence, or held an interest in a primary residence, within three years of purchase
o The home must be a primary residence, purchased and closed between January 1, 2009 and November 30, 2009
o Principal residences where the tax credit equals 10% of the home’s value, up to a maximum of $8,000 (married couples filing separately are eligible for a maximum of $4,000 each)
o First-time homebuyers must live in the primary residence for at least three years (if the owner moves, sells, or leaves the primary residence for any other reason within the first three years, the credit must be repaid)
o Single first-time homebuyers with income up to $75,000, or couples filing jointly with adjusted gross income up to $150,000, qualify for the full $8,000
o The tax credit does not have to be repaid, unless the owner moves, sells, or abandons the primary residence for any other reason