Through the home buyer tax credit of the American Recovery and Reinvestment Act, an $8,000.00 tax credit is available for first-time home buyers on a primary residence purchased during calendar year 2009. While much has been written about the benefits of the credit, the following is intended to provide a high-level snapshot of the program’s requirements:

• A person is considered a first-time buyer if he/she has not had any ownership interest in a home in the three years prior to the day of the 2009 purchase.

• The amount of credit is determined by: (i) the purchase price (credit = 10% of purchase price); and (ii) the buyer’s income level (individual buyers with an income of $75,000.00 or less and couples with a combined income of $150,000.00 or less are eligible for the full tax credit).

• The credit is then phased between $75,000.01 and $95,000.00 for single taxpayers and $150,000.01 and $170,000.00 for married couples filing a joint tax return.

• The credit does not have to be repaid provided buyer occupies the home for 3 years or more.

• The credit is a “refundable credit” – if the purchaser’s total tax liability in the given year is less than $8,000.00, the IRS will send a refund for the balance (If, for example, the purchaser’s total tax liability = $7,000.00, the purchaser would receive a check for $1,000.00)

• A 2009 purchase may be claimed on the purchaser’s 2009 return or in the alternative, the purchase may be treated as if it occurred on December 31, 2008 thereby giving the purchaser the option of filing an amended 2008 tax return (see Form 1040X at www.irs.gov).

Related Articles:

• Requesting Credit Report Hurts Credit Score?
• Protect Your Credit by Freezing It
• First Time Boston Homebuyer Tips
• How to Improve Your Credit Score
• Pros and Cons of Going FHA