American Recovery and Reinvestment Act: First-Time Homebuyer Tax Credit

admin — Tue, 21 Apr 2009 02:34:54 +0000

Now is an opportune time to be a first-time homebuyer. The Federal government, along with many municipalities, is offering opportunities for homebuyers through the American Recovery and Reinvestment Act (ARRA). One such program is the First-Time Homebuyer Tax Credit. Through December 1, 2009, first-time homebuyers, defined as purchasers who have not owned a principal residence in the previous three years, are eligible for up to an $8,000 tax credit. The program is for a principal resident only. Below are the stipulations under the program as found in the American Reinvestment and Recovery Act.

American Recovery and Reinvestment Act

First-Time Homebuyer Tax Credit

Feature

The Credit Stipulations

Amount of Credit

Maximum credit amount: $8,000

Eligible Property

All Principal Residences are eligible.

Refundable

Yes. The credit reduces (or can eliminate) income tax liability for the year of the purchase. Any unused amount of tax credit is refunded to the purchaser. Purchaser will continue to receive refund for unused amount when tax return is filed.

Income Limit

The full amount of credit is available for adjusted gross income up to $75,000 for individuals & up to $150,000 for joint returns. The credit phases out above the caps of $95,000 for individuals and $170,000 for joint returns.

First-time Homebuyer Only

Purchaser (and purchaser’s spouse) may not have owned a principal residence for 3 years prior to purchase.

Revenue Bond Financing

Purchasers who utilize revenue bond financing can use the tax credit

Recapture

If the home is sold within three years of purchase, the entire amount of credit is recaptured on the sale. This applies only to home purchased in 2009.

Termination

December 1, 2009 is the end of the tax credit.

Effective Date

This tax credit program is effective as of January 1, 2009.

Below is a video that explains the details of the Federal Housing Tax Credit.

Sources:

IRS.gov: http://www.irs.gov/newsroom/article/0,,id=204671,00.html

Full Summary of IRS Information Related to the American Recovery and Reinvestment Act of 2009: This site contains all of the links to IRS Tax Related Provisions associated with the American Reinvestment and Recovery Act.

The American Recover and Reinvestment Act of 2009 Full Summary of provision from the Senate Finance, House Ways & Means Committees: (PDF document of 19 pages).

National Association of Home Builders. This site presents details of frequently asked questions relating to the tax credit.

Information deemed reliable, but not guaranteed. Check the recovery.gov website to confirm pertinent information.

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American Recovery and Reinvestment Act: First-Time Homebuyer Tax Credit