NEW 2009 First-Time Homebuyer $8,000 Federal Tax Credit
As part of President Obama’s “Homeowners Affordability and Stability Plan of 2009” that was recently signed into law, Congress has increased federal income tax credit from $7,500 to $8,000, providing even greater incentive for first-time homebuyers.
The modifications to the federal tax credit are as follows:
FEATURE | 2008 $7,500 TAX CREDIT | 2009 $8,000 TAX CREDIT |
Effective Date |
Purchases on or after April 9, 2008 and before January 1, 2009. Repayment to begin for 2010 tax year. |
All revisions are effective for properties purchased on or after January 1, 2009 and before December 1, 2009. |
Amount of Credit |
Lesser of 10 percent of cost of home or $7,500. |
Maximum credit amount increased to $8,000 |
Eligible Property |
Any single-family residence (including condos, co-ops, townhouses) that will be used as a principal residence. |
No change, all principal residences eligible. |
Refundable |
Yes. Reduces (or can eliminate) income tax liability for the year of purchase. Any unused amount of tax credit is refunded to the purchaser. |
No change, purchasers will continue to receive refund for unused amount when tax return is filed. |
Income Limit |
Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Refund phases out above those caps ($95,000 and $170,000). |
No change, same income limits continue to apply. |
First-time Homebuyer Only |
Purchase (and purchaser’s spouse) may not have owned a principal residence in 3 years previous to purchase. |
No change. |
Revenue Bond Financing |
No credit allowed if home financed with state/local bond funding. |
Purchasers who utilize revenue bond financing can use credit. |
Repayment |
Yes, portion (6.67% of credit or $500) to be repaid each year for 15 years, starting with 2010 tax filing. |
No repayment for purchases on or after January 1, 2009 and before December 1, 2009. |
Recapture |
If home sold before 15-year repayment period ends, then outstanding balance of repayment amount recaptured on sale. |
If home sold within three years of purchase, entire amount of credit is recaptured on sale. Applies only to homes purchased in 2009. |
Please note:
- Eligibility is for first-time homebuyers only. In this case, a first-time homebuyer is defined as an individual who has not owned a primary home at any time during the past three years, but who may have done so previously. Although certain income limits do apply, the amount of the credit is the same for all taxpayers, married or single.
- Individuals whose Form 1040 filing status is single (or head of household) are eligible for the tax credit if their income is no more than $75,000. Individuals who file a joint return may have no more than $150,000 in income.
- Individuals with incomes between $75,001 and 94,999 (single) or $150,001 and $169,999 (joint returns) are eligible for a partial tax credit.
- Individuals with incomes greater than $95,000 (single) or $170,000 (joint return) are not eligible for this tax credit.
In addition, visit www.federalhousingtaxcredit