The $7500 tax credit for first time home buyers is a significant incentive to purchase. It is a major 
positive provision in the Housing Bill that passed Congress over this past weekend. This is a credit not a deduction, which means it directly reduces the taxes owed - dollar for dollar.
This gives the new home owner directly as much as $7500 cash in the pocket at tax refund time.
The credit incentive is retroactive back to April 9, 2008 and continues through June 30, 2009. The incentive is 10% of the purchase price up to a maximum of $7500.
The actual legislation that implements this tax incentive is called the Housing Assistance Tax Act of 2008 HR 5720. It is included as part of the massive Housing Bill HR 3221, that is waiting to be signed into law.
The incentive is available to individuals who make less than $75,000 and to couples who make less than $150,000. Above these income levels the incentive is reduced and is completely phased out at $95,000 for an individual and $170,000 for a couple.
The tax credit must be repaid over the next 15 years, and more quickly if the home is sold or is no longer the primary residence. Repayment is made by increasing the tax owed in the year the home status is changed (sold or no longer the primary residence). For more details on the tax credit and repayment provisions, please see a tax accountant.
A first time home buyer is defined as not having an ownership interest in a principal residence in the previous 3 years.
This credit can be good news for many first time buyers. Some reports indicate that over 2 million first time home buyers last year, and a large percentage of them would have qualified for such an incentive it had been offered last year.
It may offset some of the less good news for home buyers in the Housing Bill with the loss of seller funded down payment assistance
Richard Smith
Home financing in Tennessee, Georgia, and Alabama.
Experience matters when it is your home loan.
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Hi Roberta. The $7500 Tax credit is for a married couple. $3750 for an individual. Since there are so many things in this that affects us, we need a compendium of consumer benefits to keep all the different aspects clear for Buyers and Sellers alike. At nearly 700 hundred pages, it may take a while. :-)