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“First Time Buyer Tax Credit” Revisited

It’s old news now. The IRS is offering a $7500 tax credit to first time home buyers. Keep reading. If you don’t own and have not owned a home in the last three years, you can take a $7500 credit (not a deduction) off your tax bill. That means, for a transaction that closes by December 31st 2008, you can take the credit for on your 2008 taxes. Owe the Feds $10,000? Pay them only $2500. Don’t owe them anything? They’ll write you a check for $7500. Also note that this is not tax or legal advice so consult the appropriate professionals (accountant and/or attorney).

Now the “fine print” (most of it gathered from federalhousingtaxcredit.com sponsored by the National Association of Home Builders). They have more information on their site than is provided here. Not everyone qualifies.

 

  • You can earn $75,000 or $150,000 on a joint return, it is prorated up to $95,000/$170,000 and you are SOL after that.
  • Must close between April 9, 2008 and July 1, 2009.
  • YOU MUST REPAY THE CREDIT! 1/15 every year starting two years after credit is taken.
  • If the house is sold before the credit is paid back it is taken out of the sale (with some exceptions).
  • The credit is actually 10% of the cost of the home. If you bought a $50,000 (must be principle) residence, your credit could only be $5,000.

 

One Comment on ““First Time Buyer Tax Credit” Revisited

  1. So why are they calling it a ‘credit’? I would have loved to have been a fly on the wall during that conversation on semantics.

    But, like mentioned on other blogs and likely this one, the IRS has no means to enforce the repayment of this ‘credit’. Maybe they settled on the word ‘credit’ since it, too, is going on the ol’ USA CREDIT card.

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