Florida Housing Help Financial Action Team

Thinking about buying a home?

First-time homebuyer tax credit expires December 1, 2009

This credit expands the Housing and Economic Recovery Act of 2008

First-time homebuyers may be able to take advantage of a tax credit for a home purchased in 2009. But they must act quickly.

Qualifying taxpayers who buy a home before Dec. 1 this year can get up to $8,000 or $4,000 for married filing separately. For a newly constructed home, the purchase date is the first date the taxpayer occupies the home. A revised version of Form 5405, First-Time Homebuyer Credit, is posted on www.IRS.gov. The revised form incorporates the changes for 2009.

  • Qualifying taxpayers who buy a home in 2009 before Dec. 1, 2009, do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date.
  • For homes purchased in 2009 taxpayers can choose to take the credit on their 2008 or 2009 tax return
  • They can claim 10 percent of the purchase price up to $8,000 or $4,000 for married individuals filing separately. The amount of the credit is reduced for taxpayers whose adjusted gross income is more than $75,000 or $150,000 for joint filers.
  • This is a refundable credit which means that even if the taxpayer does not owe any tax, the money will be refunded to the taxpayer.
  • For purposes of the credit, you are considered to be a first-time homebuyer if you, and your spouse, did not own any other main home prior to the three-year period ending on the date of purchase.
  • Taxpayers who purchased a home after April 8, 2008, and before January 1, 2009, are not affected by the expanded law. For these taxpayers the credit should have been claimed on their 2008 tax returns and the maximum credit is 10 percent of the purchase price, up to $7,500, or $3,750 for married individuals filing separately.
  • The credit for purchases made in 2008 is similar to a no-interest loan and must be repaid in 15 equal installments over 15 years, beginning with the 2010 tax year.

More details are available on www.IRS.gov. Updates are posted as additional information becomes available, so review the web site often for the latest information.