First-Time Homebuyer Tax Credit
A surprising number of people have not heard about the $8,000 first-time home buyer tax credit; and of the ones who have, many do not really understand what it means, how it works, or how it can benefit them.
Basically, the tax credit is as simple as this: if you are purchasing your first home OR if you have not owned a home within the past three years, the IRS says you can purchase a home before December 1, 2009, and receive in return a check from the United States Treasury for $8,000.
Do you have to pay this money back? NO
Do you have to apply this money towards your mortgage? NO
Are there any requirements as to how you do spend this money? NO
Certain requirements do come into play, however, but they are easy to understand. According to the IRS, the $8,000 first-time home-buyer tax credit is available to singles who earn less than $75,000 per year or couples filing jointly earning less than $150,000 per year.
The tax credit pays 10% of the purchase price up to a maximum of $8,000. Buyers must remain in the home for three years in order to keep the $8,000.
What happens if you have already filed your taxes for this year? Filing an amended tax return after you buy is one choice. There are other choices, and your lender can explain these to you.
Why is this tax credit available? Is it too good to be true?
The answer is simple. According to the US Treasury Department, almost half of the houses purchased in 2008 were to first-time home buyers. The purpose of this tax credit is to encourage similar purchasing in 2009 so that buyers will move into vacant homes and sellers can move out of existing homes into homes they have purchased or want to purchase. In other words, this tax credit is meant to boost the housing market.
With interest rates low and an $8,000 first-time home-buyer tax credit available, this just might be the best time ever to purchase your first home!