First-Time Homebuyer’s Credit by Craig A. Vidal, CPA

Individuals who qualify and buy homes this year may qualify for the first-time homebuyer’s credit.

The credit is 10% of the purchase price of the home up to $8,000 and is claimed on their 2009 tax return. The house must be purchased between January 1, 2009 and before Dec. 1, 2009. They also have the option to take the credit on their extended 2008 income tax return or by amending a previously filed 2008 income tax return. They can get the money sooner by claiming the credit on their 2008 tax returns. However, each situation is different and must be evaluated based upon the individual's facts and circumstances.

To qualify, a first-time homebuyer is defined as someone who has not owned a primary residence during the three years prior to the date of purchase. For a married couple, neither of the spouses can have owned a primary residence within the past three years. A primary residence is defined as the home in which you live for the majority of the time.

Unlike the credit for 2008 first-time home purchases, the credit for 2009 purchases does not have to be repaid as long as the buyer or buyers remain in the home for three years from the date of purchase.

The first-time homebuyer credit begins to phase out for taxpayers whose modified adjusted gross income exceeds $75,000, or $150,000 for married taxpayers filing jointly.

NOTE: The credit cannot be claimed until the purchase of the home is final.