FIRST-TIME HOMEBUYER TAX CREDIT
As Modified in the American Recovery and Reinvestment Act

Major Modifications Italicized

 FEATURE

CREDIT AS CREATED JULY 2008

APPLIES TO ALL QUALIFIED PURCHASES ON OR AFTER APRIL 9, 2008

 

 

REVISED CREDIT –

EFFECTIVE FOR PURCHASES ON OR AFTER JANUARY 1, 2009 AND BEFORE DECEMBER 1, 2009

 

 

Amount of Credit 

 

Lesser of 10 percent of cost of home or $7500 

Maximum credit amount increased to $8000 

 

Eligible Property 

 

Any single family residence (including condos, co-ops, townhouses) that will be used as a principal residence. 

No change

All principal residences eligible.

 

Refundable 

 

Yes. Reduces (or can eliminate) income tax liability for the year of purchase. Any unused amount of tax credit refunded to purchaser. 

No change

Purchasers will continue to receive refund for unused amount when tax return is filed.

 

Income Limit 

 

Yes. Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000). 

No change

Same income limits continue to apply.

 

First-time Homebuyer Only 

 

Yes. Purchaser (and purchaser’s spouse) may not have owned a principal residence in 3 years previous to purchase. 

No change

Still available for first-time purchasers only. Three-year rule continues to apply.

 

Revenue Bond Financing 

 

No credit allowed if home financed with state/local bond funding. 

Purchasers who utilize revenue bond financing can use credit. 

 

Repayment 

 

Yes. Portion (6.67% of credit or $500) to be repaid each year for 15 years, starting with 2010 tax filing. 

No repayment for purchases on or after January 1, 2009 and before December 1, 2009 

 

Recapture 

 

If home sold before 15-year repayment period ends, then outstanding balance of repayment amount recaptured on sale. 

If home is sold within three years of purchase, entire amount of credit is recaptured on sale. Applies only to homes purchased in 2009. 

 

Termination 

 

July 1, 2009

(But note program changes for 2009)

 

December 1, 2009 

 

Effective Date 

 

Purchases on or after April 9, 2008 and before January 1, 2009. Repayment to begin for 2010 tax year. 

All revisions are effective as of January 1, 2009 

 

 

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