Some of you have been asking recently about the home ownership tax credit that was part of the Housing and Economic Recovery Act (H.R. 3221) passed earlier this year. You should always talk to your accountant or tax specialist for the nitty gritty, but the following are some key points to consider:
- You have until July 1, 2009 to make a purchase that qualifies – The tax credit was passed in July 2008 and is worth up to $7,500 during a single tax year. You can take the credit on your 2008 tax return if you bought after April 9, 2008. If you are thinking of buying in the first half of 2009 you will be able to take the credit on your 2009 tax return.
- You don’t have to be a first-time home buyer – This is a common misconception but the tax credit is available to those who have not owned a home for at least 3 years.
- You DO have to pay it back – This is another common misconception but the money is more like an interest-free loan than a credit. The Federal government is looking for their money back in the form of 6.67% of the credit amount over 15 years. If you qualify for the full $7,500 then your payment will be about $500 a year and start in 2011. NOTE: The National Association of Realtors has been asking Congress to remove the payment and make this a “real” tax credit, not a loan. We’ll keep you posted…
- No paper work, are you kidding? – Believe it or not you don’t have to fill out an application or go through an approval process. However, before you claim the credit on your tax return, make sure you meet all the eligibility requirements.
More related information: Update! $7,500 Tax Credit
Tax Credit IRS Form 5405 (259.2 KiB, 379 hits)
Tax Credit for Unmarried Homeowners (19.6 KiB, 396 hits)
