First Time Buyer Tax Credit

First Time Home Buyer Federal Tax Credit

The extension of the American Recovery and Reinvestment Act of 2009 provides a one time $8,000 tax credit for first time home buyers who purchase until June of 2010, and adds a $6500 tax credit for buyers who have been in their homes for 3 of the last 5 years.

For the tax credit program, the IRS defines a first-time home buyer as someone who has not owned a principal residence during the three-year period prior to the purchase.
The tax credit does not have to be repaid.
The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000, or $6,500 for buyers who have lived in an owned home for 3 of the past 5 years.
The credit is available for homes purchased on or after January 1, 2009 and before May 1, 2010. The closing must happen within 60 days after the deadline.
The measure doubles the income ceiling for eligible individuals to $125,000. Homes must cost less than $800,000 to qualify.
Because the tax credit is "refundable," qualified buyers can take advantage of it even if they don't have much tax liability.
Buyers have to own the home for at least three years in order to capitalize on the credit. If they sell the home before then, they will have to return the credit to the government. (There are some exceptions, such as death or divorce).
Click to download IRS Form 5405 - First Time Homebuyer Tax Credit Form

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First Time Home Buyer Federal Tax Credit