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First-Time Home Buyer Tax Credit Guidelines
Sunday, December 18, 2011
The First-Time Home Buyer Tax Credit is a credit that serves as an effort to revive the country's fallen real estate market and encourage people to start buying again after the economic collapse of 2007. The tax credit guidelines vary depending on the year in which the house was purchased.
Established by the Housing and Economic Recovery Act in 2008, the First-Time Home Buyer Tax credit applied to those who had either never purchased a home or had not owned a principal residence in the previous three years. It allows home buyers who purchase a home in 2008 to receive a credit worth 10 percent of the home's purchase price.
The maximum amount of the credit is $7500 for individuals and $3750 each for married couples who file separately and unmarried people who purchase together. The maximum amount of the home can not exceed $800,000. 2008's credit is more of an interest-free loan than an actual credit because it must be re-payed over a 15-year period. Those who accepted the maximum credit will pay the government $500 per year.
In 2009, the American Recovery and Reinvestment Act of 2009 extended the First-Time Home Buyer Tax Credit. The maximum amount of the credit was changed to $8000 for individuals and $4000 each for married couples who file separate tax returns and unmarried people who choose to purchase together.
The largest difference is that 2009's credit does not need to be repaid. It is a true credit that must only be re-payed if the home buyer does live in the home as a primary residence for at least three years after purchase.
In November of 2009, the government finally responded to the citizens who had been asking, "What about me? I want to sell my house
." The Worker, Home Owner and Business Assistance Act extended and expanded the First-Time Home Buyer Tax Credit to include credits for long-time home owners who wished to sell their house and purchase a new primary residence. Many Americans were relieved to finally have someone pay attention when they said, "I need help to sell my house
This Act also raised income limitations from between $75,000 and $95,000 to an increased $125,000 for individuals. For couples, it was raised from $150,000 to $170,000 to an increased $225,000.
2010's deadline was extended from May 1, 2010 to May 1, 2011 for qualifying service members who were on official extended duty outside of the country.