The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009.
So what does that mean for you?
Let’s start off by defining the term "first-time home buyer". A first-time home buyer, according to the federal government in regards to the tax credit, is defined as anyone who has not owned a primary residence in the last three years. So technically, you could currently own a home that you have not lived in for the last three years and still be considered a first time home buyer. This is great news for our clients that have moved from out of state and were unable to sell their home so they decided to rent it out. We run into this situation often, believe it or not!
How is this home buyer tax credit different from the tax
credit that Congress enacted in July of 2008?
The most significant difference is that this tax credit does not have to be repaid. Because it had to be repaid, the previous "credit" was essentially an interest-free loan. This tax incentive is a true tax credit. However, home buyers must use the residence as a principal residence for at least three years or face recapture of the tax credit amount. Certain exceptions apply. For more information regarding the new first time home buyers tax credit, visit http://www.federalhousingtaxcredit.com/2009/faq.php.
Can I receive the tax credit prior to closing?
There has been much debate about whether or not this tax credit can be received prior to closing and used for a down payment. After speaking at length with other real estate professionals, tax professionals and IRS agents the answer that I have received is mixed across the board. I'm not here to debate whether or not you can use this for your down payment. If you are purchasing in a rural development area such as Kuna, you won’t need to worry as there is rural development financing available which doesn’t require a down payment or private mortgage insurance.For those of you that are not in a position to purchase Kuna Real Estate or any other area that allows for a rural development loan, there is a program in which you can receive an advance for your down payment. IHA, the Idaho Housing Authority, has a program which allows for Tax Credit 2nd's which is basically an advance on your tax credit to be used towards your down payment. This is explained below in further detail.In conjunction with an IdaMortgage loan, a subordinate loan will be offered to qualified first time homebuyers in 5% of the sales price up to $7,000. A fee will be charged of $250 with $150 refunded upon repayment of the loan on or before the loan due date. The loan will accrue interest at 3.0% with a due date of July 1, 2010. The Tax Credit 2nd Loan is expected to be paid off from the borrower’s tax refund obtained through the application of the federal tax credit. Borrower must be a first-time homebuyer and qualify for an IdaMortgage loan. For more information you can visit
I've already filed my 2008 tax return; do I need to wait until I file my 2009 tax return?
No. You can wait until you file your 2009 tax return or you can file an amendment to your 2008 tax return immediately after closing. Filing an amendment will allow you to receive the money in about 4-10 weeks.
Still not sure if you qualify for the 2009 tax credit return?
If you have any questions about qualifying for the first time home buyer tax credit act make sure and see a reputable Certified Public Accountant . Next step: get pre-approved for a mortgage loan which will give you bargaining power when you find the home of your dreams, then start your Search for your Idaho Home! Or contact me Today!