CPA Rockville – First-Time Home Buyer Tax Credit Basics

Posted on: March 23rd, 2010 by

Rockville, Maryland - House for Sale

CPA Rockville – The first-time home buyer tax credit applies to individuals or couples who have purchased a new home after April 8, 2008 and before May 1, 2010.  There are a few different versions of the credit depending on when the home was purchased:  the first, for homes purchased in 2008, the credit, with some exceptions, must be repaid and takes the form of a $7,500 interest-free loan; the second, for homes purchased in 2009 prior to November 7, the credit is for a maximum of $8,000 and, with some exceptions, does not have to be repaid, but its only for new homeowners that have not owned a primary residence in the previous 3 years; and finally, beginning November 7, 2009, an additional category of new home buyers, long term residents was added.  The credit for this group is a maximum of $6,500, which, with some exceptions, does not have to be repaid.

The credit is for 10 percent of the purchase price of the home, with a maximum available credit of $7,500 (or $8,000 depending on the purchase date) for either a single taxpayer or a married couple filing a joint return, but only half of that amount for married persons filing separate returns.  Any home purchased as your primary residence and located within the United States qualifies.

This credit is not applicable for higher-income taxpayers.  For purchases on or before November 6, 2009, the phase out range for single taxpayers based on the modified adjusted gross income (MAGI) is $75,000; and for married couples is $150,000.  For purchases after November 6, 2009, single taxpayers MAGI must be less than $125,000 and married, joint filers must be less than $225,000.

Contacting your local, experienced CPA in Rockville may make filing this credit much less of a headache and prevent having to file any amendments later.  Since very specific documentation is required by the government for this credit, the return must be mailed in as a hard copy.  Consult your trusted tax specialist if you have any questions.



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