Aug 20th, 2008
Did you know that if you are an American buying your first home between April 9, 2008 and July 1, 2009, the U.S. government will give you up to $7,500 in the form of a federal tax credit?
Update: New legislation in 2009 has expanded upon the initial $7,500 tax credit. Although there is valuable information here for people who purchased homes in 2008; anybody buying in 2009 may also want to read about the $8,000 tax credit and how to claim this credit.
The tax credit is part of recently-enacted legislation to help the nation recover from the recent mortgage crisis. Basically, the first-time home buyer tax credit is designed to keep Americans buying homes. Not so much for our sake, but for the sakes of builders, real estate agents, and mortgage lenders who earn their livelihood from home sales.
Still, this tax credit, along with soft real estate prices, make it an excellent time to buy a first home.
How does the tax credit work?
The tax credit is basically an interest-free government loan of 10% of your home purchase price, to a maximum of $7,500, to help defer the initial costs of buying your first home.
Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 can get the full tax credit, and taxpayers with higher incomes may be eligible for a partial credit.
Taxpayers can claim the credit on their federal tax returns for the year in which the home was purchased. The taxpayers will then repay the credit over the subsequent 15 years of tax returns, interest free.
For more information, the National Association of Home Builders provides some consumer information about the tax credit.
Ready to go house-hunting? Save time, money, and aggravation by lining up your financing first with a mortgage pre-approval. Read my post on how to get no-obligation mortgage quotes online.
Need to file your taxes? Did you know you can prepare your federal income tax return online and for FREE with TurboTax? Learn more about TurboTax Online Federal Free Edition »
I'm David, an ex- financial journalist and recovering debtaholic. I'll help you get out of debt, get saving, and get on with life. Sound good? Please subscribe (RSS or e-mail) or follow me on Twitter.
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You folks blaming Bush – it was the Democrat Congress that wrote and passed this law.
John
I must agree with you Brandon. I purchase in Aug 08, and I did take advantage of the 7500. I’m not complaining, I’m happy that I got what I got. I know though that money does not grow on trees and that Ill be paying that back plus more. You should all be lucking that your living the American dream. Owning a little or a big piece of America. Just think, If you were the one that bought 2 years ago and making a payment on a house that is worth half of what you paid for it. Or renting because you could not make your payment, or said screw it im just going to let my house go becuase it’s not worth crap!
Will, What do you mean you know that you will be paying back the $7500 plus more? The $7500 is basically an interest free loan and you don’t have to start paying it back for 2 years after you claim it on your taxes.
Brandon,
It’s a metaphor, meaning we will all pay for it some how. Including the 8000. That free loan help me out a lot. I’m just glad that I did not buy earley. I’m also glad that I did not buy Later, because of the mulitiple offer wars going on in my area that I live in. Plus the programs that they offered when we bought, they dont have anymore.
if i buy a home under a land contract ,do i still qualify for the 8000 tax credit
We closed on a house in Aug. 2007. Does anyone know about any tax credit for 1st time home owners who closed in 2007?
Jamie, the first time home buyer’s credit wasn’t even created until April of 2008. Although they amended portions of it in the details of Obama’s wishlist that was approved in Feburary, they did not make it retroactive to 2007. People who qualify and bought a house in 2008 get $7500 and people who qualify and bought a house in 2009 get $8000. People who bought/buy in 2007, 2010 or any other year do not qualify. There may be other tax credits you qualify for though.
We are closing on our home June 20, 2009, with or without the credit.
We are purchasing the home from our FIL with a lawyer drawn purchase agreement, the standard one that is used in Texas.
There is just no way around the relative issue? I’d even utilize the $7500 one if we could.
Thanks.
We are closing on our home June 20, 2009, with or without the credit.
We are purchasing the home from our father in law with a lawyer drawn purchase agreement, the standard one that is used in Texas.
There is just no way around the relative issue? I’d even utilize the $7500 one if we could.
Thanks.
Brooke, the updated version of the First Time Home Buyer’s Tax Credit law may include something that removes the relatives restriction. I can’t recall. Find the text online for the bill (signed into law on February 17th I believe) to see if there is mention of the relatives-related text. If there is no mention of it then you can’t get the $8000 or the $7500 because if it wasn’t changed then the original rule still applies which disqualifies you from both. If the relatives restriction was removed then you get $8000 because you bought within the time frame specified to receive the $8000.