The American Recovery and Reinvestment Act of 2009, was signed by the President on February 17, 2009.  As many of you may already know, the law includes a provision for a Homebuyer Tax Credit.  The $8,000 tax credit is aimed at first time home buyers. If you are thinking of buying a home, the timing of the purchase will likely impact your ability to fully utilize the credit.

Homebuyer Tax Credit  The law, (unlike the previous $7500 credit), provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009.  The new $8,000 tax credit does not require repayment.  Most of the details of the credit will be the same as under the 2008 rules; the credit will be claimed on your tax return to reduce your income tax liability.  If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.

Please feel free to contact us if you would like to have additional information on the Homebuyer Tax Credit.

Common questions:

1. Do I have to be a first time home buyer?

No, just not have owned a home in the last three  years. If you owned a home before and it has been at least three years of not being a home owner you can use the credit.

2. Can I use it for my downpayment?

No, it won't be there waiting for you at the closing. After you close you file for it as part of your tax return and you will get as a refund or as a saving on your tax bill.

3. Do I have to repay it?

No, it is yours to keep if you live in the home for at least three years. If you move out earlier then you will have to repay a portion of it.

4. Is it available for all first time buyers?

No, it is phased out for higher income buyers. Consult your accountant to see what you would qualify for.