Blogs → Jason's Blog → First Time Homebuyer Federal Tax Credit

Posted Jul 01, 2009 7:56 am (3 years ago)

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This is a great time to be in the market for a new home, especially if you are a first time homebuyer. Not only are real estate prices low, but the US federal government is offering up to $8,000 as a tax credit to first time buyers who purchase a home between January 1 and November30, 2009.  And, unlike the previous tax credit incentive of up to $7,500, this money does not have to be paid back.

Not every home buyer will qualify, and even those who do qualify may not get the full amount. The actual amount offered is 10% of the sale price of the home, up to $8,000. Single home buyers with a yearly income over $75,000 ($150,000 for couples) will not qualify for the full amount. Applicants for this credit must be a US citizen or a legal alien. Luckily for most first time home buyers, these qualifications should not be a problem.

There are a couple of catches that potential buyers should be aware of. First, if this tax credit is obtained after a purchase this year, the home owner has to stay in that home, as their primary residence, for at least three years. If you move before then, the money you received from the tax credit will have to be paid back. Second, the home sale has to be closed between the first of January and the end of November. If you don't close the sale on your new home until December 1^st, even if it was scheduled to be closed earlier, you miss out on the tax credit.

The first time home buyer tax credit has already had an affect on home sales. Although the number of unsold homes is still higher than normal, the number of completed existing home sales has begun to rise. While still no where near where the number used to be, it has at least improved over the past few months, and it is estimated that the number of sales will continue to rise through the year.

So, what does this mean for you? Well, if you are considering buying a home this year, don't wait. There are only five months left of this special incentive, and buying a home doesn't happen overnight. This is a great time to buy, and the number of foreclosures has been increasing, giving you a great selection of homes to choose from.

Want more information? The National Association of Home Builders has set up a new website, Federal Housing Tax Credit for First Time Home Buyers, that has all of the information you need to get started.