$8,000 Tax Credit for First Time Homebuyers

Note: This is intended to provide an overview only – for specific information or individual concerns, please contact your lawyer, accountant and/or financial advisor.

Congress has recently passed a federal income tax credit for first-time homebuyers that  is the lesser of either 10% of the home’s cost or $8,000. 
This will be available to qualified first-time home buyers for the purchase of a principal residence between January 1, 2009 and before December 1, 2009.
For example:

• The tax credit is available for first-time homebuyers or those who have not owned in the last three years.  

• The credit does not require repayment (unlike the 2008 iteration of the credit).  The credit will be claimed on a tax return to reduce the purchaser's income tax liability.  If any credit amount remains unused, then the unused amount will be refunded. 

• If the home is sold within three years of purchase, the entire amount of credit is recaptured on sale.

This measure can help to significantly lower housing inventory, bring stability to home values and move the country closer to economic recovery.  Many industry experts have said that the tax credit for first time homebuyers could result in up to 300,000 additional home purchases each year. 
The following chart provides more information: