Tax Credit for First Time Home Buyers

First time home buyers may be entitled to a large tax credit for a home purchased in 2008 and 2009. The First time home buyer tax credit as part of the American Recovery and Reinvestment Act of 2009 applies to home purchases that close after April 8th, 2008 and before Dec.1, 2009. This tax credit only applies to home owners who occupy the property as their primary residence, so if you don't live in the property you are not eligible.

For homes bought in 2008...
The Housing and Economic Recovery Act of 2008 established a tax credit for first-time homebuyers that can be worth up to $7,500. For homes purchased in 2008, the credit is similar to a no-interest loan and must be repaid in 15 equal, annual installments beginning with the 2010 income tax year.

For homes bought in 2009...
The American Recovery and Reinvestment Act of 2009 expanded the first-time homebuyer credit by increasing the credit amount to $8,000 for purchases made in 2009 before Dec. 1. For homes purchased in 2009, the credit doesn't have to be paid back unless the home becomes unoccupied by the taxpayer as a main residence within a three-year period following the purchase. First-time homebuyers who purchase a home in 2009 can claim the credit on either a 2008 tax return, due April 15, 2009, or a 2009 tax return, due April 15, 2010. The credit may not be claimed before the closing date, but if the closing occurs after April 15, 2009, a taxpayer can still claim it on a 2008 tax return by requesting an extension of time to file or by filing an amended return. Click here for more first time home buyer tax credit information.