The First Time Homebuyer Tax Credit
If you haven’t owned a home for more than three years, and you bought a home either last year, or are planning to purchase this year, you may be eligible for dollars from Uncle Sam. The first time homebuyer tax credit was explained in a previous post.
When you file your taxes, you will need to use Form 5405. This form lists exclusions, so read it carefully. There are income limits, and the home must be owner occupied.
There is a major difference between the tax benefits depending on the year your property closes. The IRS explains the difference between the 2008 and 2009 tax breaks in this article. Basically, it’s bad news for anyone who purchased last year. If your home closed in 2008, you have to pay back the credit back over 15 years. If you sell before the end of the 15 years, the balance must be paid off at that time. It is an interest free loan so you won’t find better terms anywhere. But this years buyers fare so much better. Not only do they have a higher credit ($8,000 instead of $7,500) but they don’t have to pay it back!
To obtain this years credit, your home purchase must close before December 1st 2009, so don’t delay!