There is a generous tax credit for the first time qualified home buyer. It can be as much as 10% of the value of the property they bought or $ 8,000, whichever is less. But how do you qualify for it? What must you do to take advantage of the tax credit?

Here's the first thing you should know about the First Time Homebuyer Tax Credit. You must be able to purchase a primary residence between January 1, 2009 and December 1, 2009.

Who qualifies for the tax credit you can apply for. Well, first time homebuyers buying a primary residence can qualify as long as he buys it within the stipulated period. So if you bought a property last year, you will not be eligible for this. The date of the sale depends on when the actual closing or transfer of the property took place. However, there are certain exemptions for special arrangements. You can consult a financial advisor for this.

Who is the first time home buyer? Although the term may seem self explanatory, there are certain criteria for which you must qualify to be considered the first home buyer. This refers to anyone who has not had a main home in the past three years. You are still qualified if you purchased a vacation home or investment property last year because these properties are not primary homes.

Another thing to consider is the income limits. To qualify, you must not exceed the income limits set by the program. For the individual filer, their adjusted gross income must not exceed $ 75,000. For couples, an adjusted gross income of no more than $ 150,000 is essential.

How is the tax credit determined? This is 10% of the value of the property purchased or $ 8,000, whichever is less. You have to keep in mind that this is refundable. This means that the qualified buyer can benefit from it even if he does not have much fiscal responsibility. However, you must take possession of the property for three years. If you sell the property before it reaches the three-year mark, you must return the tax credit to the government.

If you have already filed your tax return, you can modify it by completing Form 1040x. However, it would be better to consult a tax advisor to ensure that you took the necessary steps to modify your 2008 tax return.

HUD has also allowed buyers with FHA-insured mortgages to apply for a short-term loan of up to $ 8,000. This means that they do not have to wait until their income tax is filed before they can claim a refund.

If you plan to buy a home, now is the best time to do so. In addition to the fact that homes have lower values ​​and lower interest rates today, there is also a tax credit that you can take advantage of,

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Qualify for First Time Homebuyer Encouragement