All homebuyers that purchased their first home in 2008 can take an income-tax credit on their purchase. The first-time home buyer tax credit was passed earlier this year in Congress.
To be considered a first time home buyer, the term is used very loosely. In order to obtain this tax credit, the home must be a primary residence and the homebuyer cannot have owned a home in the last three years. Also, the home must be purchased between April 9, 2008 and July 1, 2009.
The credit being given is equivalent to 10 percent of the purchase price, up to $7,500. Single taxpayers with modified adjusted gross income up to $75,000 and couples with MAGI up to $150,000 will qualify for the full credit. However, singles with MAGI up to $95,000 and couples with MAGI up to $170,000 will get a reduced amount. For those whose incomes are higher, will not qualify.
If the amount of the credit is more than the amount of tax the homebuyer owes, they get to keep the difference, which will be in the form of an IRS refund.
For those homebuyers that receive this tax credit, must inaugurate the repayment in two years. For those who received the full credit, the repayment will be in increments of an estimated amount of $500 per year over a 15-year period.
Homebuyers who sell their home before the credit has been repaid must pay off the loan with any profits they receive. If the home is sold at a loss, the loan is dismissed.