New 1st Time Buyer Tax Credit

One of the provision of the new housing bill that was just passed is a tax credit for first time home buyers. Here are the basics:

  • You must not have owned a home for the last 3 years
  • The credit is $7,500 (this is a tax credit, not a tax deduction, so you take what you owe the IRS and subtract $7,500
  • You must buy a house on or after April 9, 2008 and before July 1, 2009
  • To get the full tax credit, single people must make no more than $75,000 and married couples no more than $150,000
  • Now here’s the not as good news. . . you must pay the credit back, so it’s basically a zero interest loan. The better news is your payments begin in the 2nd year after you buy the house and you have 15 years to pay back the loan (which comes out to $500 per year).

    Please speak to your tax preparer regarding how this tax credit will affect your tax situation.