Buyer’s Tax Credit

First-Time Home Buyer Tax Credit

The tax credit now allows buyers with FHA loans to use the credit towards closing costs, make a larger downpayment, or buy down interest rate. Learn more about the 2009 First-Time Home Buyer Tax Credit, including which purchasers and properties qualify and for how much.

First-time homebuyers may be able to take advantage of a tax credit for homes purchased in 2008 or 2009. The credit:
  • Applies to purchases that close after April 8, 2008, and before Dec. 1, 2009.
  • Applies only to homes used as a taxpayer’s principal residence.
  • Reduces a taxpayer’s tax bill or increases his or her refund, dollar for dollar.
  • Is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.

The credit is claimed using Form 5405.

For 2009 Home Purchases

The American Recovery and Reinvestment Act of 2009 expanded the first-time homebuyer credit by increasing the credit amount to $8,000 for purchases made in 2009 before Dec. 1.

For home purchased in 2009, the credit does not have to be paid back unless the home ceases to be the taxpayer’s main residence within a three-year period following the purchase.

First-time homebuyers who purchase a home in 2009 can claim the credit on either a 2008 tax return, due April 15, 2009, or a 2009 tax return, due April 15, 2010. The credit may not be claimed before the closing date. But, if the closing occurs after April 15, 2009, a taxpayer can still claim it on a 2008 tax return by requesting an extension of time to file or by filing an amended return.

SOURCE: See the IRS WEB SITE below that has more information on these options. http://www.irs.gov/newsroom/article/0,,id=204671,00.html

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