February 2009 First-time Home Buyers Incentive

The American Recovery Act of 2009 signed into law in February  by President Obama offers first time homebuyers a tax credit equal to 10% of their home up to $8000. This tax credit is available to first time homebuyers who purchase a home  as their principal residence in the United States on or after January 1, 2008 and before December 1, 2009.
To qualify as a first-time homebuyer, you cannot have owner an interest in a principal residence in the past three years from the date of your qualifying purchase. To qualify for the full amount of the tax credit you must earn no more than $75,000 if you are filing as a Single or Head of Household. If you are filing as a joint return you may have an income of no more than $150,000. There is a phase out of the credit if you earn more than $75,000. Consult with your tax advisor to see how much of the tax credit you qualify to receive.

The tax credit allows you to deduct the credit from your total tax liability in the year you take the credit. So, if you have a total tax liability of $8000. for 2009 and you qualify for the full $8000 first-time buyers tax credit, you would pay nothing. Also the tax credit is "refundable". This means that if your total tax liability for 2009 is $4000 and you qualify for the full $8000 first-time home buyers credit, the credit would be used to pay your $4000. tax bill and you would receive a tax refund credit from the IRS for the $4000. difference. Consult with your tax advisor to see how the tax credit would impactyour tax return.
The tax credit does not have to be repaid. However you must live in the property for three years. If you qualify for the tax credit it is a fantastic opportunity for you not to miss.