Tax Break (Loan) For First Time Home Buyers
H.R. 3221, part of the Housing and Economic Recovery Act of 2008, allows first time homebuyers to take a $7500 tax credit from the purchase of a home. One cannot have owned a home in the previous three years and must be a US citizen who files taxes. The home must also be purchased prior to July 1, 2009. Married couples must not make over $150,000 as their modified adjusted gross income to qualify.
Any home qualifies and must be the principle residence.For example, if one owed $10,000 in taxes, they could subtract the $7500 and then owe the remainder of $2,500. If they owe less than $7500, the government will issue them a check. The credit may be taken on either the 2008 or the 2009 tax return.
But, there is a catch. The credit is really a loan and must be paid back to the government. Therefore, it may be paid back over a period or 15 years, interest free. If the homeowner sells the home before that time, the entire remaining amount is due from the profit of the sale.
Article condensed from The Showcase USA, Aug. 18,2008.
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