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Tax Credit for First Time Homebuyers

In September of 2008, the Housing and Economic Recovery Act of 2008 was signed. The Act was created to encourage many people to make that big purchase of a new home now instead of waiting. The economy and housing market was in need of a boost.

The first tax credit was in the amount of $7500 or 10% of the purchase price with a repayment period of 15 years, beginning two years after claiming it on their tax return. This amount and conditions was created and signed under the Bush administration.

Under Bush’s tax credit, taxpayers were required to pay back the credit therefore it came to be referred to as a interest free loan/credit. President Bush’s hope was that with this incentive more taxpayers would use the extra cash to make purchases that they may have otherwise not made.

To qualify, homes had to be purchased between April 9, 2008 & July 30, 2009. First time homebuyers under this law were not just homebuyers making their first initial home purchase but those who had not previously owned a home in the three years preceding the date of current purchase.

After taking office, President Obama revised the Housing Act, raising the amount to $8000 and no longer making it a repayable credit. It became law on Feb. 17, 2009 and was known as the American Recovery and Reinvestment Act of 2009. Under this new law, homes were now required to be purchased between Jan. 1, 2009 & Dec. 1, 2009

Circumstances that would disqualify a taxpayer from being eligible for tax credit. ,[object Object]

Selling the home in first year

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