If you’ve been thinking about buying a home this year, you may want to act soon since the federal First-Time Home Buyer Tax Credit program is set to end Nov. 30.
The tax credit is worth 10 percent of the purchase price of the home up to a maximum of $8,000, and despite the name of the program, you don’t have to be a first-time home buyer to take the credit. In fact, anyone who hasn’t owned a home during the last three years is considered to be a first-time buyer for this program.
Take advantage of tax credit, low interest rates
The tax credit isn’t the only reason to consider buying a home this year. Interest rates on home mortgages are still very low and home prices have declined in many areas. A mortgage payment might even be cheaper than the rent you are currently paying each month.
The deadline to use the First-Time Home Buyer Tax Credit may seem to be a long time away, but buying a home can take several months, so home buyers need to act quickly.
First-time home buyer tax credit rules
The tax credit is refundable, which means you'll get back the full amount even if you owe less income tax, and it doesn’t have to be repaid, unless you move out of the house within three years. You can claim the tax credit on your 2008 or 2009 federal income tax return.
The full credit is reduced for single home buyers who earn more than $75,000 and married couples who earn more than $150,000, and it’s phased out completely for single and married buyers who earn more than $95,000 and $170,000, respectively.
Be aware of tax credit deadline
If you want to use the tax credit, be sure to discuss your plans with your REALTOR® and lender, so they’ll be able to help you buy a home before the deadline.
There has been some speculations that Congress may extend the deadline for the tax credit, but an extension is by no means certain.