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Frank Rexford, CMPS
Vice President of
Mortgage Lending
Guaranteed Rate, Inc
Frank Rexford
Certified Mortgage Planning Specialist
6011 Farrington Road
Suite 101
Chapel Hill, NC 27517
NMLS ID# 119234 |
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A Bigger & Better
First Time Home Buyer Tax Credit
8000 reasons to buy your first home
On February 17, 2009, President Obama signed a new tax credit into law. This credit is available for qualified first-time home buyers who purchase a principal residence on or after January 1, 2009 and before December 1, 2009. The tax credit is for 10% of the purchase price, or $8,000, whichever is lower.
The credit can be used on either 2008 or 2009 Federal tax returns. And unlike the $7,500 tax credit enacted in 2008, the new credit does not have to be repaid. If you've already filed your 2008 return, and buy your first primary residence later this year, you can file an ammended return. This tax credit is refundable - meaning if you owe no taxes, you'll be refunded the $8000. This is basically free money for first-time home buyers.
This program has the potential to provide a big boost to the housing market, as there are many first-time home buyers patiently sitting on the sidelines. Since they do not have to sell a home in order to buy a new one, they have the capabability of buying homes right now. Many potential first-time home buyers have been waiting for a sign that it's time to move forward. Interest rates are low, it's a buyer's market in mosts of the country, and now there's what amounts to an $8000 gift as well.
If that is not a great signal to buy I don't know what is!
Here is a snapshot of the program details:
- The tax credit is for first-time home buyers only. If you have not owned (been on title for) a principal residence in the past 3 years, you are a first-time home buyer.
- The tax credit does not have to be repaid.
The tax credit does not have to be repaid!
- The tax credit is equal to 10 percent of the home’s purchase price, up to a maximum of $8,000. Most homes in our area are priced well over $80,000, so first-time home buyers in our area who qualify to use the credit should be eligible for the full $8000.
- The credit is available for homes purchased on or after January 1, 2009 and before December 1, 2009.
- Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit...higher income borrowers may receive a partial credit.
You will need to complete IRS Form 5401 and include it with your 2008 or 2009 Federal tax return. Click here to view the form.
Download official IRS form 5405 directly from irs.gov here.
Here are some recent news articles that review the new tax credit:
U.S. News & World Report
First-Time Home Buyer Tax Credit: 6 Things to Know
CNN Money
Final score: $8,000 for homebuyers
First-time purchasers get a tax credit windfall if they buy before December.
The Boston Globe
Generous Tax Credit Available For First Time Home Buyers.
Los Angeles Times
Window open till Dec. 1 for home buyers' tax credit
Were you a first-time home buyer in 2008?
First-time home buyers who purchased a principal residence on or after April 9, 2008 and before January 1, 2009 may qualify for a $7,500 tax credit. This credit must be repaid over 15 years, so it is essentially an interest free loan. Click here for more information.
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