First Time Home Buyer Tax Credit: The Basics

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By Neetal Parekh on September 10, 2009 6:50 AM

If you have been looking to enter the housing market by now, realtors, friends, family, and colleagues have probably already alerted you about the $8,000 first time home buyer tax credit.  You've heard about it, but how does it work? And what are the requirements? Below is the information you need to take advantage of the program. 
  • The first time home buyer tax credit expires December 1, 2009.  So, you have to finalize the purchase of your home before then.
  • A "first time home buyer" is someone who has not owned a principal residence for the three-year period before buying this new home.
  • The first time home buyer tax credit applies to the home used as buyer's primary residence
  • The tax credit does not have be repaid
  • Homebuyers receive 10% of the home's purchase price, up to $8,000 maximum.
  • Single taxpayers with incomes up to $75,000 qualify, as do couples with incomes up to $150,000.
  • The first time home buyer tax credit reduces the taxpayer's tax bill or increases refund, dollar for dollar
  • Tax credit can be claimed on homebuyer's 2009 tax return, due April 15, 2010.

The first time home buyer tax credit program has gained popularity over the past months and now would-be homeowners are scrambling to find their white-picket dream so they can begin the home buying process and seal the deal by December 1st.  If you fall in that category, be active in viewing properties, aim to get pre-approved for a loan quickly, and keep your eye on interest rates so you get the best rate possible.  Then the holidays will be all the merrier lined with an $8,000 refund.

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