Consumers » What are the Details of the New First Time Buyer Tax Credit?
What are the Details of the new First-Time Buyer Tax Credit?
On July 30, President Bush signed into law the Housing and Economic Recovery Act of 2008, legislation aimed at strengthening and energizing the housing market.
Of most interest to people who do not own a home but have been thinking about it is a $7,500 tax credit to qualified first-time home buyers who purchase a home between April 9, 2008, and June 1, 2009. That’’s a tax credit, meaning those who qualify will receive a dollar-for-dollar reduction in what they owe the year the credit is taken against their income taxes. If you're a first-time buyer and have been hesitant to buy, now might be a great time to consider making a move!
- The credit amount can be 10 percent of the cost of the home purchased, not to exceed $7,500.
- Any single-family property (including condos) that will be used as a primary residence is eligible.
- The full amount of the credit is available for individuals with adjusted gross income of no more than $75,000 ($150,000 for joint filers). The amount of credit available gradually phases out as adjusted gross income reaches $95,000 for a single filer and $170,000 for joint filers.
- The credit is repayable over 15 years (without interest) in equal installments of 6.67% of the credit or when the owners sell the home, assuming there is sufficient capital gain from the sale. Repayment does not begin until two years after the credit is claimed. For someone taking the full $7,500 credit, they would repay $500 each year for 15 years.
Download more detailed information on the tax credit, including a chart as well as FAQs and answers from the National Association of REALTORS.
Also, the National Association of Home Builders have developed a website to answer questions regarding this legislation.
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