If you purchased a home in 2008 or 2009, you may be
eligible for the Federal First-Time Homebuyer Tax Credit.
Learn about the First-Time Homebuyer Tax Credit
requirements and qualifications.





Housing Assistance Tax Act of 2008
Originally, The Housing Assistance Tax Act of 2008 provided a tax credit for
"first-time homebuyers" who purchase a principal residence in the
United States after April 8, 2008, and before July 1, 2009.

For 2009, the tax credit was avaialable to those who purchased a principal
residence in the United States from January 1, 2009 through November 30, 2009.

Qualifications
You qualify as a "first-time" homebuyer if you, and your spouse if
married, had no present ownership interest in a principal residence during
the three-year period ending on the date of purchase of the home for which
the credit is being claimed.

If you constructed your main home, you are treated as having purchased it
on the date you first occupied the home.

Generally, the credit operates much like an interest free loan and must be
repaid over a 15-year period. 

First-Time Homebuyer Tax Credit Restrictions
You cannot claim the the credit if you meet any of the following restrictions
below:
  1. Your modified adjusted gross income (AGI) is $95,000 or more ($170,000
    or more if married filing jointly).
  2. You are eligible to claim the District of Columbia first-time homebuyer
    credit for 2009 or any prior year. 
  3. Your home financing comes from tax-exempt mortgage revenue
    bonds.
  4. You are a nonresident alien.
  5. Your home is located outside the United States.
  6. You sell the home, or it ceases to be your main home, before the end
    of 2009.
  7. You acquired your home by gift or inheritance.
  8. You acquired your home from a related person.

First-Time Homebuyer Tax Credit Amount
Generally, the credit is the smaller of:
  • $7,500 ($8,000 if you purchased your home in 2009), but only half of that
    amount if married filing separately.
  • 10% of the purchase price of the home.

You are allowed the full amount of the credit if your modified adjusted gross
income (MAGI) is $75,000 or less ($150,000 or less if married filing jointly).  The
phase-out of the credit begins when your MAGI exceeds $75,000 ($150,000 if
married filing jointly).  The credit is limited completely when your MAGI reaches
$95,000 ($170,000 if married filing jointly).

Repayment of the Homebuyer Tax Credit
While the term "credit" is used, it's really a misnomer because you are really
receiving an interest-free loan from the government.  It must be repaid in most
cases. 

Homes purchased in 2008: You generally must repay the credit over a
15-year period in 15 equal installments.  The repayment period begins in 2010
and you must include the first installment as additional tax on your 2010 tax return.

If your home ceases to be your main home before the 15-year period is up, you
must include all remaining annual installments as additional tax on the return for
the tax year that happens.  This includes situations where you sell the home, you
convert it to business or rental property, or the home is destroyed, condemned,
or disposed of under threat of condemnation. 

Example 1: You claimed a $7,500 credit on your 2008 tax return.  You must include
$500 ($7,500 / 15 ) as additional tax on your 2010 tax return and on each tax return
for the next 14 years.

Example 2:  You claimed a $7,500 credit on your 2008 tax return.  In 2009, you
sold your home to your son.  You must include $7,500 as additional tax on your
2009 tax return.

Note that if you sell the home to someone who is not related to you, the repayment
in the year of the sale is limited to the amount of gain on the sale.  When figuring
the gain, reduce the adjusted basis of the home by the amount of the credit you
did not repay.

Homes purchased in 2009:  You must repay the credit only if the home
ceases to be your main home within the 36-month period beginning on the
purchase date.  This includes situations where you sell the home, you convert
it to business or rental property, or the home is destroyed, condemned, or
disposed of under threat of condemnation.  You repay the credit by including it
as additional tax on the return for the year the home ceases to be your main
home.  If the home continues to be your main home for at least 36 months
beginning on the purchase date, you do not have to repay any of the credit.

Note that if you die, repayment of the credit is not required regardless of the
year you purchased your home.  If you filed a joint return and then die, your
surviving spouse would be required to repay his or her half of the credit.



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