Credit for First Time Home Buyer

Credit for First Time Home Buyer

Key Points

There is a credit available to individuals who purchased their first home after April 8, 2008, and before July 1, 2009. For a home that you construct, the purchase date is the first date you occupy the home.

The credit is 10 percent of the purchase of the home, with a maximum available credit of $7,500 for either a single taxpayer or a married couple filing a joint return; $3,750 for married persons filing separate returns. The full credit is available for homes costing $75,000 or more.

The credit is actually an interest free loan and will be repaid over the next 15 years.
It is repaid in 15 equal annual installments beginning with the second tax year after the year the credit is claimed. You may need to adjust your withholding or make quarterly estimated tax payments to ensure you are not under-withheld.

Vacations home do not qualify for the credit.

Taxpayers who have not owned another home at any time during the three years prior to the date of purchase are considered first time home buyers.

The credit is claimed on a new form 5405.

As with most credits, it is subject to income limitations.