Tax Credits and Benefits of Home Ownership

American Recovery and Reinvestment Act of 2009 provides a federal tax credit for first-time homebuyers equal to 10% of the purchase price of their home up to $8000.

Who is Eligible
The tax credit is available only to first-time home buyers or those that have not owned a principal residence in the last three years.

You must live in home for 3 years to receive tax credit; otherwise, credit received is due as taxes for the year of the sale.

Effective Dates for the Tax Credit
The tax credit is effective for homes purchased on or after January 1, 2009 and before December 1, 2009. To qualify, you must actually close on the sale of the home  during this period.

Income Limits
Home buyers who file as single or head-of-household taxpayers can claim the full $8,000 credit if their modified adjusted gross income (MAGI) is less than $75,000.

For married couples filing a joint return, the income limit doubles to $150,000.

Single or head-of-household taxpayers who earn between $75,000 and $95,000 are eligible to receive a partial first-time home buyer tax credit.

Married couples who earn between $150,000 and $170,000 are eligible to receive a partial first-time home buyer tax credit.

The credit is not available for single taxpayers whose MAGI is greater than $95,000 and married couples with a MAGI that exceeds $170,000.

Tax Credit is Refundable
A refundable credit means that if you pay less than $8,000 in federal income taxes, then the government will write you a check for the difference. 

Buyers may file for tax credit with 2009 IRS tax return or by amending their 2008 return.

Types of Homes that Qualify for the Tax Credit
All homes, whether single-family, townhomes, or condominium apartments will qualify, provided that the home will be used as a principal residence and the buyer has not owned a principal residence in the prior three years. This also includes newly-constructed homes.

For more information, go to http://www.federalhousingtaxcredit.com