New! $7,500 tax credit for first-time homebuyers

First-time homebuyers can take advantage of the new temporary tax credit signed into law on July 30, 2008, by President Bush as part of the Housing and Economic Recovery Act of 2008. Below are some of the parameters of the new program. Link to FAQs on the tax credit developed by the National Association of REALTORS® (NAR).

• The tax credit is for 10 percent of the cost of the home, not to exceed $7,500.
• It's important to note the tax credit must be paid back over a period of 15 years like an interest-free loan.
• It's available for any single-family residence (including condos) that will be used as a principal residence.
• The tax credit reduces income tax liability for the year of purchase. It can be claimed on tax return for that tax year.
• There is an income requirement. To be eligible for the full credit, individuals must have an adjusted gross income of no more than $75,000 ($150,000 on a joint return). The tax credit is not available for individuals with incomes of $95,000 or higher ($170,000 on a joint return).
• Applicants must be first-time homebuyers. (The buyer and the buyer's spouse may not have owned a principal residence in three years previous to purchase.)
• The credit applies for purchases on or after April 9, 2008, and before July 1, 2009.

Learn more about the tax credit.

 Source: National Association of REALTORS®

Hear Illinois REALTORS® and NAR tax counsel Linda Goold talk about the benefits of the tax credit and how it will affect a person's 2008 or 2009 tax refund. Listen to the tax credit podcast.