First Time Home-Buyer Tax Credit

The New first-time Home buyer Tax Credit
(Courtesy of Business Tax Recovery.com)

Definition of a tax credit

A tax credit is generally much more valuable than a tax deduction. The tax credit reduces the actual amount of tax that must be paid. A deduction, on the other hand, only reduces the taxable income. Therefore, the tax deduction is subject to the variation in the progressive tax rate. A tax credit does not depend on the tax rate and so it is of equal value to the taxpayer regardless of his income level.
Congress has approved a tax credit for first-time** home buyers of up to $8000*, and unlike the first attempt at this, you do not have to pay it back when you sell your home***.


Frequently Asked Questions
Q: How much is the credit?
A: The tax credit would be $8000* or 10% of the purchase price, whichever is less.

Q: What type of purchase is eligible?
A: The tax credit is available for the purchase of a principle residence by a first-time**
home buyer.

Q: Who qualifies for the first-time ** home buyer credit?
A: According to the IRS, any taxpayer who has not owned a home during the last three years
prior to the date of purchase, is considered a first-time buyer.

Q: And I really don't have to repay the credit?
A: No, This is a change from the previous bill. However***, if the home is sold within three
years of purchase, the credit will be reversed.

Q: Are there income limitations on the credit?
A: The tax credit begins to phase out for individuals with adjusted gross income over $75,000
($150,000 for joint filers).

Any questions beyond these basics, should probably be addressed by a CPA. This new tax credit is only valid for the year 2009, so if you have been waiting to squeeze that last drop out of the price, it is time to get serious. If this tax credit has the desired effect, it could cause an increase in home buying, and stop declining prices in their tracks. Right now it is a real buyers market with large inventories of unsold homes to choose from. So quit procrastinating and get qualified for a loan while the "the gettin is good". Then don"t for get to call your favorite Realtors, Phil Neidhart at 503-644-9337, or Kathie Xu at 503-805-9238.