If you purchased a home in 2008, 2009 or 2010, you may be
eligible for the Federal First-Time Homebuyer Tax Credit.





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 2010, the tax credit was available to those who purchased a principal
residence in the United States through April 30, 2010.


First Time Homebuyer Tax Credit Ended
 Except for certain people (see qualifications below) the credit cannot be
claimed for a home purchase in 2011.  The credit for all other homebuyers
ended with purchases completed by or in contract on April 30, 2010.

Qualifications
If you, or your spouse, were a member of the U.S. uniformed services or
Foreign Service, or an employee of the intelligence community on
qualified extended duty outside of the United States for at least 90 days
between January 1, 2009 and April 30, 2010, and you purchased a home
eligible for the credit by April 30, 2011 you may be eligible for the first-time
homebuyer credit.


 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 $125,000 or more ($225,000
    or more if married filing jointly).
  2. The purchase price of the home must be $800,000 or lower. 
  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 acquired your home by gift or inheritance.
  7. You acquired your home from a related person.

First-Time Homebuyer Tax Credit Amount
Generally, the credit is the smaller of:
  • $8,000 ($4,000 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 $125,000 or less ($225,000 or less if married filing jointly).  The
phase-out of the credit begins when your MAGI exceeds $125,000 ($225,000 if
married filing jointly). 

The phaseout range is only $20,000.  The credit is limited completely phased out
when your MAGI reaches $145,000 ($245,000 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 from January - November 2009:  Up to $8,000, the credit
does not need to be paid back.

Homes purchased from December, 2009 - April, 2010:  Up to $8,000 for
first-time buyers, the credit doest not need to be paid back.

Homes purchased from November 7, 2009  - April 2010:  Up to $6,500 for
"long-term residents" buying a new home, the credit doest not need to be paid back.

"Long-term residents" are people who already own a home.  To qualify, individuals
need to have owned and lived in residence for at least five consecutive years in the
eight-year period that ends on the purchase date of the new property. 

Until April 30, 2011:  Homebuyer credit continues to be available for qualified
members of the U.S. uniformed services.

No repayment of credit for home bought after 2008 and held for 36 months:
You will not have to repay a credit claimed for a home bought after 2008 if you
continue to own it and use it as your principal residence for at least 36 months
starting with the date of purchase.

 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, or if you sell the home,
or convert the entire home to rental or business property.

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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