Time is Running Out for the $8,000 Tax Credit

Have you closed on a home or will you close on a home between April 8th, 2008 and November 30th, 2009? If that’s the case you may be missing out on free money. The First Time Homebuyer Credit is available to any taxpayer who has recently purchased a home and has not perviously owned a home within the 36 months preceding the closing date.

This First Time Homebuyer tax credit was originally introduced in the 2008 tax year as part of the Housing and Economic Recovery Act of 2008. Any taxpayer who closed on a home after April 8th, 2008 and before December 31st, 2008 is entitled to a refundable credit, which simply means the credit dollar for dollar can become part of a refund after taxes, of 10% of the purchase price up to $7,500. The credit is set up like a no-interest loan, by making equal payments starting in 2010 until the amount of the credit is repaid.

With the American Recovery and Reinvestment Act of 2009 the First Time Homebuyer Credit was upgraded. This refundable credit was increased to 10% of the purchase price up to $8,000, and the purchase window changed to January 1st, 2009 to November 30th, 2009. The credit lost its repayment schedule as well, becoming essentially free money as long as the home stays the taxpayer’s principal residence for the following three years.

Who says money can’t grow on trees? This may be your last chance to strike a bargain on a home of your own. Hurry though, this window is closing fast. Simply close on a home by November 30th, 2009 and either amend your 2008 tax return or claim the credit on your 2009 taxes.

For more information and regulations on this credit visit http://www.irs.gov/newsroom/article/0,,id=204671,00.html

Nikki McDonald is a certified Tax Professional. These tips are not meant to be a policy but meant to guide you in your own unique tax situation. Remember, no one can assist you better than your own personal tax associate.