First-time Home Buyer Tax Credit
What: H.R. 3221 - Housing and Economic Recovery Act of 2008.
Amount of Credit: Ten percent (10%) of cost of home; not to exceed $7,500 for total credit
Eligible Property: Any single-family residence (including condos, coops) that will be used as a principal residence.
Refundable: Yes. Reduces income tax liability for the year of purchase. Claimed on tax return for that tax year.
Income Limit: Yes. Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000, respectively).
First-time Homebuyer Only: Yes. Purchaser (and purchaser’s spouse) may not have owned a principal residence in 3 years previous to purchase.
Recapture: Yes. Portion (6.67% of credit) to be repaid each year for 15 years. If home sold before 15 years, then remainder of credit recaptured on sale.
Effective Date: Purchases on or after April 9, 2008.
Termination: July 1, 2009
Interaction with Alternative Minimum Tax: Can be used against AMT, so credit will not throw individual into AMT.