It is always a bit difficult to sort out all the aspects of the new First-Time Homebuyer Credit that is now available. Things have changed in 2009 and here is a basic overview.

As always, it is important to check with your professional accountant to know how it applies to you specifically. Here is a basic breakdown for you to review.

First-Time Homebuyer: Someone who has not owned a principal residence during the 36 month period edning with the purchase date of the residence.

Purchase Date: Existing home - Date Title closes; New Construction - Date of occupancy

2009 Credit:

  • Lesser of 10% of home's purchase price or $8,ooo
  • If sold or no longer the taxpayer's principle residence within the 36 month period following the purchase date of the residence, the full credit must be repaid that year.
  • Credit phaseout for modified Adjusted Gross Income about $75,000 to $95,000 ($150,000 to $170,000 for Married Couples Filing Jointly).
  • Refundable credit
  • Can elect to take credit on 2008 or 2009 tax return. Can use this election to avoid phaseout of credit.
WARNING: Credit is not allowed if the home is purchased from a related party (typically a parent, grandparent, spouse, or child). NOTE: Congress allows purchase from a sibling to qualify for the credit.