Right now, an $8,000 tax credit is being offered by the government to enable aspiring homeowners to buy their first home.¹

If you are eligible, the tax credit can help ease the financial transition from renting to owning. It can assist with buying furniture and home-dcor; making home improvements like remodeling, landscaping and painting; or paying down debt as you adjust to new monthly expenses. The tax credit now applies to sales occurring on or after January 1, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.

AlsoThe Worker, Homeownership, and Business Assistance Act of 2009 has established a tax credit of up to $6,500 for qualified move-up/repeat home buyers (existing home owners) purchasing a principal residence after November 6, 2009 and on or before April 30, 2010 (or purchased by June 30, 2010 with a binding sales contract signed by April 30, 2010).

This current plan does NOT need to be repaid as long as you keep your home for 3 years. 

The tax credit is part of the American Recovery and Reinvestment Act of 2009, signed into law on February 17, 2009, and enacted to help stabilize the housing market and strengthen our overall economy.

Are you eligible for the tax credit?

The tax credit is designated for first-time home buyers.² A first-time home buyer is defined as a buyer who has not owned a home in the last three years.

The tax credit is equal to ten percent of the home purchase price, which is capped at $8,000. Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit. Single taxpayers with incomes between $75,000 and $95,000, and married couples with incomes between $150,000 and $170,000 qualify for partial credit.

All homes purchased between January 1, 2009 and on or before April 30, 2010  including single-family, townhomes, or condominiums will qualify for the tax credit, provided that the home is used as the principal residence. This also includes new construction homes.

SO TO SUM THINGS UP IN 3 SIMPLE FACTS:

1)  IT IS NOT A LOAN !!
2)  CLAIMING THE TAX CREDIT IS SIMPLE !!
 -  No applications or pre-approvals are necessary to take advantage of this opportunity - homebuyers just claim the tax credit on their Federal Income Tax Return.  After the amount that the homebuyer is eligible to claim is determined on IRS Form 5405, that amount is simply entered on line 69 of their 1040 income tax return forms.  Keep in mind, this credit CAN NOT be claimed for a future purchase; it must be claimed for a finished transaction .
3)  THE TAX CREDIT MAY BE ACCESSED .
 -  If a homebuyer believes that they will qualify for the tax credit, they have the option of reducing their income tax withholding up to the amount of the credit by making arrangements with their employer or human resources department.  The homebuyer will then be able to accumulate cash to contribute to their down payment.

To learn more about obtaining the tax credit and repayment, visit the Frequently Asked Questions.

For further information about eligibility requirements and limitations, visit www.irs.gov .

This information is subject to change without notice.

1. Consult a tax advisor regarding your individual situation. This information is not intended to provide legal advice, tax advice, accounting services, or investment advice, nor should it be relied on for legal advice. Please seek the advice of your own legal counsel.

2. Not available for those who qualify for a similar tax credit in the District of Columbia, or for those who finance their home purchase under a mortgage revenue bond program.