There is a new tax credit available for first time home buyers. The tax credit is $8,000 and does not have to be repaid.
Am I eligible?
To qualify, you must be a buyer who has not owned a principal residence in the 3 years prior to this purchase, and you must be a US citizen who files tax returns.
Does it matter how much money I make?
You can claim the full tax credit if you are single and make less than $75,000 or married and make less than $150,000. You can take a partial credit if you make less than $95,000 as a single person or $170,000 as a couple. The credit is not available if you make more than those amounts.
When do I have to buy a home?
Home purchases made between January 1, 2009 and December 1, 2009 qualify for the tax credit. The transaction must officially "close" during that time period, so don't wait until the last minute.
What types of homes qualify?
All single family homes, townhomes and condominiums qualify as long as you plan to use it as your principal residence (and meet the other requirements above).
How does the credit work?
When you file your tax return, you will apply the tax credit against the amount of income taxes you owe. So, if you owe $10,000, your tax bill will be reduced to $2,000. If you owe $5,000, you will get a tax refund of $3,000. Remember that if you are employed and have been paying withholding from your paycheck or have paid quarterly estimated taxes, you already have tax money stored up with the IRS. This credit is in addition to what you have personally paid.
To find out more information, check out www.federal housingtaxcredit.com.