Home Buyer Tax Credit

Part of the stimulus package of the home buyer' tax credit. This credit is intended to help home buyers with a credit to be applied on their taxes.

Example - If your normal tax refund check is $1,000 and you purchase a home, following the rules below your tax refund check will be $9,000. A tax deduction reduces a filer’s adjusted gross income. A tax credit is deducted from the amount of federal taxes owed by a taxpayer.

The homebuyer tax credit is part of the Housing and Economic Recovery Act of 2008-2010. It was created to encourage homebuyers to purchase homes despite a precarious economy and housing market.

Features Home Buyer Tax Credit
Home Buyer Eligibility

First-time homebuyers (no ownership interest in the last 3 years)
Eligible Property

Any property in the US, new or resale, that will be the homebuyer’s principal residence (includes mobile homes and houseboats)
Sales Amount Restrictions

No restrictions
Maximum Credit Calculation

10% of the purchase price, up to $8,000
Recapture

No repayment as long as home is not sold within 36 months of the closing date
Income Eligibility

$75,000 (Single Filers) $150,000 (Married Filers) partial credit available if over income limits
Effective Timeframe

Closing must occur between December 31, 2008 and May 31, 2010
Restrictions
  1. Cannot be claimed by nonresident aliens
  2. Cannot be claimed if property sold during same tax year
  3. Cannot be claimed if tax filer claims the first-time homebuyer credit for District of Columbia
  4. CAN BE CLAIMED IF LOAN FINANCED WITH MORTGAGE REVENUE BONDS (used by many housing finance agencies)
Is It Refundable

Yes, the taxpayer receives the full credit even if they have not paid in taxes an amount as great as the credit amount.

This home buyer' tax credit is yet another horrific example of government pork. Although people are lining up to use and qualify, this is doing nothing to help people stay in their homes.

It is however helping to keep prices artificially inflated as it pushes people over the edge to buy a home regardless if it is a good idea or not just so they don't miss out on the so called free home buyer' tax credit.