Florida Future Realty

Tax Credit for First Time Home Buyers

Tax credit for first time home buyers is a great incentive to purchase a home in SW Florida. Last year, Congress passed a tax incentive for first time home buyers with the notion it would encourage and motivate potential buyers and stimulate the housing market. That tax credit however was a repayable interest-free loan that many first time home buyers had trouble with. This year, with the new president and a new economic outlook, the first time home buyer has much more to look forward to in the home buying avenue. The American Recovery and Reinvestment Act of 2009 is well underway and gives home buyers another opportunity to own a home. What is it?

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. This tax incentive does not have to be repaid which makes it a true tax credit. This is great news if you have been thinking about purchasing a home in SW Florida! There a few eligibility requirements for the first time home buyer that have to be met in order to receive the credit.

For instance, the home you purchase must be used as your primary residence for a minimum of three years. Otherwise, you will have to repay the tax credit amount unless you meet certain criteria for exception. It is best to check with an accountant to get more detailed information on the allowable exceptions. Also, in order to receive the tax credit, a first time home buyer should not have owned a principal residence during the three-year period prior to the purchase. There are also income limits to receiving the tax credit. The income limit for single taxpayers is $75,000; the limit is $150,000 for married taxpayers filing a joint return. Again, this is an area of expertise for an accountant or tax professional.

The economic stimulus plan has made participating in the tax credit for first time home buyers fairly easy. You claim the tax credit on your income tax return. The IRS has Form 5405 which helps determine the home buyer’s tax credit amount. That's it! No other forms are required. So now potential first time home buyers have more advantages in the real estate market. According to the Florida Housing Finance Corporation's research, the tax credit will help more than 3,000 people into new homes.

Keep in mind that in SW Florida there are many homes with low asking prices, as well as short sales and foreclosures on the market ready and available for purchase. Also keep in mind that in order to qualify for the 2009 tax credit, a signed contract on a home must be completed by November 30, 2009. There is still time to take advantage of the first time home buyer tax credit as well as the low interest rates- this is the perfect combination to make your dream of owning a home possible.