$8000 Tax Credit for First-Time Homebuyers
First time home buyers, you're in luck!
In February 2009 Congress passed the American Recovery and Reinvestment Act to stimulate the economy and the stagnant real estate market by offering an $8000 tax credit to first-time homebuyers. Homebuyers who qualified purchased their home between January 1, 2009 and December 1, 2009. Congress has since extended that program to homes contracted by April 30, 2010 that close before June 30, 2010.
In order to receive the maximum tax credit an individual cannot make more than $125,000 per year, and married couples filing jointly cannot make more than $225,000 per year. Married couples where either spouse has owned a home in the past 3 years do not qualify. The tax credit calculation is 10% of the sales price with the maximum being $8000. Buyers who receive the tax credit must live in the house for at least 3 years to retain all of the $8000. The tax credit can be filed on IRS form 5405 in either the 2008, 2009 or 2010 tax filing season. Provisions have been made for borrowers that qualify to use the $8000 tax credit in advance for help with the down payment or closing costs.
Additionally, Congress has extended a similar program for move up homebuyers that have lived in their home for 5 of the past 8 years to receive a tax credit of 10% of the sales price or a maximum of $6500.