There are two sections of the National First-Time Homebuyer Credits, each applying to a specific time period for “first-time homebuyers”.
Both credits have the following same criteria:
a. A first time buyer is defined as a taxpayer and/or spouse who have had no home ownership interest 36 months prior to the first home purchase date.
b. The home purchased must be used by the taxpayer and spouse as a principal residence.
c. The credits are phased out as a single taxpayer’s Adjusted Gross Income increases from $75,000 to $95,000 ($150,000 to $170,000 for joint filing taxpayers).
d. The credit is refundable which means the government will refund the portion of the credit exceeding the taxpayer’s tax liability.
The initial National First-Time Homebuyers Credit signed into law, July 30, 2008, applies to “first-time homebuyers” who purchased a home after April 8, 2008 but before January 1, 2009.
a. A refundable tax credit of up to $7,500.00 or 10% of the home price whichever is less.
b. The tax credit is to be repaid with no interest, prorated over 15 years and is added to tax return beginning in the second tax year after the tax year the home is purchased.
c. If taxpayer sells the home before the full credit is recaptured, the amount remaining to be recaptured is added to the next tax filing after sale of home.
The amended National First-Time Homebuyers Credit signed into law, February 17, 2009, applies to “first-time homebuyers” who purchased a home after December 31, 2008 but before December 1, 2009.
a. A refundable tax credit of up to $8,000.00 or 10% of the home price whichever is less.
b. The tax credit does not have to repaid, unless the taxpayer(s) receiving the credit sell the residence or fail to use the home as a principal residence within 36 months from the purchase date. A homeowner’s death does not trigger a recapture and transfer as part of a divorce proceeding may not trigger a recapture (subject to certain conditions).
c. The credit extends to two or more unmarried individuals who purchase a home and qualify for the credit. The aggregate credit total may not exceed $8,000.00 and the co-owners may allocate the credit in any reasonable manner. However a co-owner who does not qualify for the credit (i.e. exceeds income threshold or owned a residence in last 36 months) may not take any portion of the credit. But, if one unmarried co-owner does not qualify for the credit, the entire credit can be allocated to the co-owner who qualifies.
d. The taxpayer(s) may elect to: (1) take the credit on their 2008 tax return(s) by amending such return(s); or (2) take the credit on their 2009 tax return(s).
Please call or email our office if you have any questions concerning the National First-Time Homebuyers Credit or need assistance in filing for the credit.