Understanding the 2009 First Time Home Buyers Tax Credit

Obama’s First Time Home Buyers Tax Credit can be a great way to help make a new home affordable, while taking advantage of historically low home prices and interest rates.

The First Time Home Buyers Tax Credit is available for up to 10% of the homes purchase price or $8,000, whichever is greater. This tax credit is different from previous tax breaks for new home buyers in that it does not need to be repaid. Other tax credits for new home buyers, like the 2008 tax credit were simply no interest loans offered by the federal government. This tax credit, on the other hand, is provided to the homeowner and does not need to be repaid as long as the homeowner lives in the new home for at least three years.

This tax credit, which is part of the American Recovery and Reinvestment Act of 2009, is a powerful tool that can be used to fix up the home, pay down the mortgage, or help out with bills. Since it does not need to be repaid, it can be a great way to increase equity in a home.

It is also not necessary to owe anything in taxes to receive the tax credit. This is because this is a tax credit and not a tax deduction, the latter of which would only count towards the taxes.

This first time buyers tax credit is a great tool for those who wish to purchase a new home. It can be used on almost any type of home, including manufactured homes, mobile homes, condominiums, town homes, traditional single family homes, and even houseboats.

Requirements to Receive 2009 Tax Credit

While the home buyers tax credit can be a great tool, there are several restrictions. In order to receive the tax credit, the homeowner must:

• Be a United States Citizen, although exceptions are made for people who are NOT a non-resident alien.
• Have an income lower than $75,000 for single buyers and $150,000 for married couples. Married couples incomes are added together.
• Not have owned a home in the last 3 years.
• The home must have been purchased between January 01, 2009 and December 01, 2009.
• The home can not be purchased from family members, including spouses.

How do I Claim the First Time Home Buyers Tax Credit?

Receiving the home owners tax credit is also relatively simple and it can be claimed on either the 2008 taxes or 2009 taxes. People who have already filed their 2008 taxes can choose to file an amended tax return, which allows the homeowner to typically receive the tax credit within eight weeks of the IRS receiving the amended return. Otherwise, the homeowner can wait until April 2010 and claim it on their 2009 taxes.

It is important to note that this tax credit will go towards any outstanding tax debts first, and the remainder will be refunded to the tax payer. For those that do not owe anything in taxes, the entire $8,000 credit is offered.

To take advantage of Obama’s First Time Home Buyers Tax Credit, the homeowner will have to complete the IRS’s Form 5045. For those who wish to receive their tax credit early and decide to amend their 2008 tax return, it will be necessary to complete a 1040X Form, as well as the 5045.