First Time Buyer Tax Credit

HOUSING AND ECONOMIC RECOVERY ACT OF 2008

First-time Homebuyer Tax Credit

FEATURE

H.R. 3221

Housing and Economic Recovery Act of 2008

Amount of Credit

• Ten percent of cost of home, not to exceed $7500

Eligible Property

• Any single-family residence (including condos, coops) that will be used as a principal residence.

Refundable

• Yes. Reduces income tax liability for the year of purchase. Claimed on tax return for that tax year. 

• Yes. Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000, respectively).

First-time Homebuyer Only

• Yes. Purchaser (and purchaser’s spouse) may not have owned a principal residence in 3 years previous to purchase.

Recapture

• Yes. Portion (6.67 % of credit) to be repaid each year for 15 years. If home sold before 15 years, then remainder of credit recaptured on sale.

Impact on District of Columbia

Homebuyer Credit

• DC credit not available if purchaser uses this credit.
  

Effective Date

• Purchases on or after April 9, 2008
  

Termination

• July 1, 2009
  

Interaction with Alternative

Minimum Tax

• Can be used against AMT, so credit will not throw individual into AMT.