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Tax Credits for First Time Home Buyers

I am preparing for a brief talk and thought it would make a nice topic for a post. As you can tell from the title, it will only apply to a certain percentage of people, but, it is information which is not commonly well-known or understood. Here are the basics of the available tax credit for first time home buyers:

  • Who is a first time home buyer? Seems obvious right? Of course it is someone buying her first home. WRONG! A first time home buyer is anyone who has not owned a home in the past three years. For married couples, both parties must qualify as "first time home buyers".
  • Does every first time home buyer qualify? No, there is a phase out based upon income. The phase out begins a $75,000 of modified adjusted gross income (MAGI) for single taxpayers and $150,000 of MAGI for marrieds.
  • How much of a credit can you get? The maximum credit is the lesser of $7,500 or 10% of the purchase price.
  • What's the good news? The tax credit is "refundable" which means if you own less tax than the credit, you will get money back!
  • What's the catch? It is not a true credit...it is really a no interest loan from the government. The credit needs to be paid back in equal installments over 15 years--or sooner if you sell your house or do not use it as your primary residence.
  • OK...any other things to watch out for? Yes, the credit is only available for purchases before July 1, 2009, unless extended.

Any questions? Email me and put tax credit in the subject. Don't forget to read this.

Categories: Real Estate

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Bayer & Black, P.C. - Fairfield County Attorney

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195 Danbury Road, Suite 160
Wilton, CT 06897

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195 Danbury Rd., Suite 160 P.O. Box 459 Wilton, CT 06897