How the New First-Time Buyer Tax Credit Works

Under the new housing bill, home buyers who have not owned a home in the last three years will be eligible for a tax credit equal to 10 percent of the property up to a maximum of $7,500. Here’s how it works:

  • The credit is $3,750 for married couples filing separately. Unmarried people who jointly purchase a home will be able to divide the $7,500 credit.

  • This program is actually a loan, which home buyers must repay over 15 years at zero percent interest beginning in the second year after they purchase the home. A home buyer who qualified for the whole credit would pay $500 for 15 years or about $41.67 per month.

  • The credit applies only to homes purchased on or after April 9, 2008, and before July 1, 2009.

  • High-income home buyers don’t qualify: Eligibility begins phasing out for single filers with adjusted income of more than $75,000 and $150,000 for joint filers. It completely phases out at $95,000 for singles and $170,000 for married couples filing jointly.

Source: Realtor Magazine

One thought on “How the New First-Time Buyer Tax Credit Works”

  1. Great, it looks like there was a plus side to my house search taking so long! This money will help pay for our beautiful but dying oak tree to be removed.

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