Thinking about buying a home?

Tax Credits Aid Homebuyers

If you recently purchased a home or are planning to do so within the year, you may be eligible for a limited-time tax credit of up to $7,500. This credit is only available to recent homebuyers who have not owned a home in the past three years, and who purchased their home between April 8, 2008, and July 1, 2009.

As part of the Housing and Economic Recovery Act of 2008, the tax credit reduces a taxpayer’s tax bill or increases the refund, dollar for dollar. This tax credit is also fully refundable, meaning that the credit will be paid out to eligible taxpayers even if no tax is owed or the credit is more than the tax owed.

The credit operates much like an interest-free loan, because it must be repaid over a 15-year period. For example, an eligible taxpayer who buys a home today and properly claims the maximum available credit of $7,500 on his or her 2008 federal income tax return must begin repaying the credit by including one-fifteenth of this amount, or $500, as an additional tax on his or her 2010 tax return.

Qualification criteria are based on the date of the home's purchase and income limits: for a married couple filing a joint return, the phase-out range is $150,000 to $170,000. For more information about the tax credit and to see if you may qualify, visit the IRS Web site at http://www.irs.gov/newsroom/article/0,,id=186831,00.html.