Everything you need to know about the First Time Buyer tax credit

First Time home buyer Tax Credit

Over the last several years real estate prices have been in a sharp decline. Part of the reason for this is the high valuations that were seen in 2005, as prices were climbing at some of the fastest rates ever. Now, with housing markets around the country facing large inventories of unsold homes means that there are very reasonably priced homes for the first time home buyer. To help improve demand the federal government is offering a program that will give first time home buyers assistance with purchasing their home, the first time home buyer tax credit. However, like all government programs there are various qualifications that must be met by all first time home buyers to be eligible.

First Time Home Buy Eligibility

To qualify for the first time home buyer tax credit, everyone must be purchasing the property as their primary residence. This is the residence that someone will be living in most of the time. It can include: condominiums, homes, co ops, houseboats and mobile homes. However, there is an exception to this rule, an individual can qualify for the tax credit if they own rental or vacation homes, provided that they can show that they these were not their primary residences over the last three years.

Limited Time

The first time home buyer tax credit will not always remain in place, instead the government is going to be phasing it out over the next two years. Currently, all first time home buyers are eligible for the $8,000.00 tax credit for purchasing a home until April 2010. At this point, the credit will be closed to the general public and will only be available to members of the military, intelligence community along with Foreign Service until April 2011.

Purchase

The maximum value of the property that can be purchased with the first time home buyer tax credit is $800,000.00.

Income

There are income restrictions to qualify for the tax credit. What happens is the credit can be phased out based on annual income; with the maximum limits being placed on those who make more than $125,000.00 per year individually or couples that make $225,000.00.

Clearly, the first time home buyer tax credit has many different benefits. Yet, there are various qualifications that must be met to be eligible for this program. It is through understanding the different qualifications that will help all first time home buyers determine if this is something they should be using to purchase their first home.

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