First Home Buyer Tax Credit

If you haven’t owned a home in the last three years, then the IRS considers you a first time home buyer. If you are in this category and are considering a property purchase, then get moving! You have until April 30 to have an accepted purchase contract to receive the $8000 (or if your home purchase is less than $80,000, 10% of the purchase price) tax credit provided by the IRS.

This is a great opportunity, IF owning a home fits your current financial circumstances. One of the worst choices would be to buy a home that you can’t afford with an uncertain income future, just because you want to get $8000 from the federal government. Please plan your purchase carefully and make sure you have enough income reserves to handle a job loss or decrease in wages.

Yes, a tax credit is real money, unlike a tax deduction. There is no minimum income requirement to receive the credit. However there are some caveats to be aware of to make sure you can take advantage of this credit:

  • If you make more than $125,000 (or as a married couple, $250,000 a year), then you may not receive all or part of the credit.
  • If you sell the home within 3 years, you may need to pay back the entire tax credit.
  • You MUST close on your purchase by June 30. Unfortunately many short sales are taking 3-4 months to complete, so these types of sales may not be the best choice if getting the tax credit is of paramount importance.

For more specific information, visit the IRS website (http://www.irs.gov/newsroom/article/0,,id=206291,00.html ).