Home Buyers Tax Credit – Now Bigger and Better

by Elizabeth Cooper-Golden

in Huntsville Home Buyer Tips

firsttimebuyer.jpgIn 2008 Congress passed a First Time Home Buyer Tax Credit that amounted to an interest-free loan of 10% of the purchase price up to $7,500.

In a previous post we highlighted this tax provision along with the Alabama Housing Finance Authority’s (AHFA) First Step program.

The law defines ‘first-time home buyer” as anyone who has not owned a principal residence during the last three years and tests the home ownership of both spouses in the case of a joint purchase. The new bill signed into law in February 2009 has made significant changes to the previous bill for first-time home buyers as follows:

  • Homes purchased after January 1, 2009 and before December 1, 2009
  • AHFA bond money no longer disqualifies a buyer for the tax credit
  • The maximum tax credit has been increased to $8,000
  • The repayment obligation has been eliminated
  • The new bill retains the credit recapture if the home is sold within 3 years
  • The credit is phased out with incomes over $150,000 for joint returns

For a more complete explanation of this updated provision see the FHA Website dedicated to this bill.

3 comments on “Home Buyers Tax Credit – Now Bigger and Better

  1. My question is: What if you have already purchased a home and have taken the tax credit under the previous bill?

  2. Elizabeth on said:

    Josh, we are not tax professionals and of course would advise you to consult with a tax professional in preparing your tax returns.

    Nonetheless, the way I read the FHA Website you would have the option to file an amended return and claim the updated version of the bill. However the purchased after January 1, 2009 provision may be a limiting factor.

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