In an effort to stimulate the housing market, the federal government instituted a $7,500 tax credit to help first time home buyers.  This is an great opportunity to make use of all those tax dollars you have been paying in the past and will of course be paying in the future.  The following provides an overview of the program.

The Housing and Economic Recovery Act of 2008 authorizes a $7,500 tax credit for qualified first-time homebuyers purchasing homes before July 1, 2009.

The recently passed first-time homebuyer credit is designed for someone who has not owned a principal residence within a three-year period prior to purchase of a new home.

The tax credit works like an interest free loan.  Homebuyers receiving the tax credit will be required to repay the credit to the government over 15 years, or when they sell (if there is sufficient capital gain from the sale!).

The income limit for single taxpayers to be eligible for the full $7,500 credit is $75,000.  For married taxpayers filing jointly the income limit is $150,000.

The credit has a phase-out so that the closer a buyer comes to the maximum phase-out amount, the smaller the credit will be.  The credit amount is gradually reduced as an individual’s income reaches $95,000 for a single return or $170,000 for a joint return.  Individuals with income above the phase out limits are not eligible for the tax credits.

The law allows qualified taxpayers the choice to claim the purchase as part of their 2008 tax return even if the purchase was made in 2009.

The program ends on July 1, 2009.

Feel free to contact me for additional information.  You can also visit: www.federalhousingtaxcredit.com or contact your tax consultant.