The first-time homebuyer credit is a new tax credit that was created by the Housing and Economic Recovery Act of 2008. If you purchased a home in 2008, the credit acts like an interest free loan. This credit must be paid back on your tax return over the course of 15 years. For homes purchased in 2009, the amount of the credit increased and the requirement to repay the credit was removed, unless the home ceases to be your principal residence within the 36-month period beginning on the purchase date.
The amount of the credit for 2008 is 10% of the purchase price of your home with a maximum credit of $7500. For 2009, the maximum credit is $8000. This is true for both single taxpayers and married filing jointly taxpayers. For married filing separately taxpayers they credit is half of the total.
To qualify for the credit for either year you need to have purchased a principal residence in the United States between April 8, 2008 and December 31, 2009. You also need to have not owned a princed residence at any time during the 3 years prior to the date of purchase of your new home. For example, if you owned a home and sold it in 2004 and started renting and then decided to purchase a new home in 2009 you would qualify for this credit as a first-time homebuyer.
This credit is claimed on your tax return using form 5405 and can be filed with either your 2008 or 2009 tax return. For help claiming the credit on your 2008 or 2009 tax return feel free to visit our website at http://www.huddlestontax.com/.