Understand the Federal First-Time Home Buyer Tax Credit

The Basics of the IRS First-Time Home Buyer Tax Credit

The American Recovery and Reinvestment Act was expanded in 2009 to establish a tax credit for first-time home buyers that could be worth up to $8,000. If you are a first time home buyer, or have not owned a home for 3 years, you may be eligible for a tax credit that can be applied to your down payment and/or closing costs. Your situation is unique, and our experts have the knowledge and experience to help you understand how this limited opportunity can help get you into a new home. We have provided a brief overview of the plan in bullet points below. Use our form at the bottom of the page to request more information, and one of our professionals will contact you to answer your questions.

This credit is similar to a no-interest loan. There are some stipulations and restrictions, most notably that there is a recapture requirement. If, within 36 months of the date of purchase, the property is no longer used as the taxpayer's principal residence, the taxpayer is required to repay the credit. Repayment of the full amount of the credit is due at that time the income tax return for the year the home ceased to be the taxpayer's principal residence is due. The full amount of the credit is reflected as additional tax on that year's tax return.
The tax credit is available for first-time home buyers only. Purchaser (and spouse) may not have owned a principal residence in the previous 3 years. The credit can only be applied to homes in the continental U.S., but there are no restrictions on home type or location.
The maximum credit amount is ten percent of the cost of the home and can not exceed $8,000.
Any single-family residence that will be a principal residence is eligible, regardless of home type or location.
The credit is available for homes purchased on or after January 1, 2009 and before December 1, 2009.
Income limitations do apply. Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 can qualify for the full tax credit. Partial credit is available with higher incomes.

Click here to see the full text of The American Recovery and Reinvestment Act of 2009, or continue on to Home Buyer Tax Credit Q&A and Scenarios.