First Time Buyer Tax Credit: $8,000 Free

Good things come in stimulus packages: the plan signed into law by President Obama contains an $8,000 tax credit for first-time buyers.

The difference between this tax credit and the $7,500 tax credit passed in 2008 is that qualified buyers do not have to pay it back.

If you are a first-time homebuyer, purchase a home before Dec. 1st, and live in the home for three years without selling it, then you can claim the $8,000 credit on your taxes.

The home must be a single-family home, and there are adjusted gross income limitations of $75,000 for an individual and $150,000 for a couple. The amount of the credit is the lesser of 10% of the home purchase price or $8,000. If a home is sold within the first three years, then the full amount of the credit is due upon sale.

The purpose of the new tax credit is obviously to stimulate the housing market. This bold and unusual move reflects a belief by our leaders in Congress and at the White House that a national recovery of the housing market is essential to the overall recovery of our economy.

This tax credit represents a major opportunity for first-time buyers, and as the housing market heads into recovery, one that is unlikely to be repeated.

For more information about the credit and whether or not you are eligible, please contact us.