Everything you always wanted to know but were afraid to ask:
Amount of Credit: 10% of cost of home, not to exceed $7500 (no credit if you purchase from a relative).
Eligible Property: Any single-family residence (including condos, co-ops) that will be used as a principal residence.
Income Limits: Single $75,000; married $150,000, based on adjusted gross income, phases out for higher income levels ($95,000 and $170,000, respectively).
First-Time Home Buyer: Purchaser may not have owned a principal residence in the prior 3 years.
Effective Date: Purchased on or after April 9, 2008.
Termination: July 1, 2009
Repayment: Or as the government likes to call it, recapture, $500 year maximum (or 6.67% of credit) when you file your taxes starting in 2010, interest free up to 15 years. If you sell your home before it’s repaid the full amount is due or if the property that received the tax credit for is no longer your primary residence (i.e. you convert your home to a rental).
How: Claim the credit on your tax returns no other forms required.
Should you take advantage of this opportunity?
Why wouldn’t you want a $7,500 interest free loan?
Uses for the money you should consider:
1. Invest in an interest bearing savings account to build your emergency fund (if you put it into a CD at 4% interest you would almost double your money in 15 years).
2. Pay off high interest credit cards freeing up a monthly cash flow.
3. Fund your IRA.
Here’s a list of frequently asked questions: First-Time Home Buyer Tax Credit