$8000 First-Time Homebuyer Tax Credit

The time to be completing taxes is well upon us, with the deadline of April 15^th quickly approaching.  Lezamiz Real Estate Co. wanted to inform you about a great opportunity that recently became available.  There is now an $8000 tax credit available for first-time homebuyers.  This is a great opportunity for anyone looking to buy their first home this year.

This tax credit was modified as part of the American Recovery and Reinvestment Act.  The tax credit amount was previously $7500, but several changes were made, and became effective as of January 1, 2009.  The amount of credit now awarded to a homebuyer will be 10% of the cost of the home or $8000, whichever is less.  This means if you buy a $50,000 home, you could potentially receive a $5000 tax credit!  Conversely, if you bought a $150,000 home, your tax credit would be limited to $8,000, instead of you receiving $15,000 (10%).  There is a separate tax form that you must fill out for this tax credit, called Form 5405.  The tax credit is a line item deduction on your 1040 that gives you another reduction in your taxes, and the Form 5405 is an attachment to the 1040.  The tax credit can reduce or eliminate your tax liability, or will actually increase your tax rebate.  Additionally, when you take your new home purchase tax credit, you are NOT required to pay the tax credit back.  There is one important caveat though.  Lezamiz Real Estate Co. recommends that you stay in your newly purchased home for at least three years after taking the tax credit, because if you sell the home within three years from the date of your purchase, the entire amount of the tax credit is recaptured from you upon the sale of your home.  This only applies to homes that are bought in 2009. 

In order to receive this tax credit, there are some eligibility requirements.  First, you cannot have owned a principal residence in the last three years, or else you are ineligible for the tax credit.  Second, there are income limitations.  If you file your taxes individually, your adjusted gross income cannot be more than $75,000; if you file joint tax returns, your adjusted income cannot exceed $150,000.  Because this tax credit is very subjective to your own individual situation, we advise speaking with your accountant, because they will be able to give you much more specific information on how to take advantage of the tax credit.