Recovery Act allows $8,000 first-time homebuyer tax credit

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Majerus

Interest rates cannot go lower, and home prices are down these days.

So, if you’re purchasing a home this year, be sure to claim the new $8,000, first-time homebuyer tax credit, which is part of the Recovery Act.

Internal Revenue Service Commissioner Doug Shulman said there are several different ways for homebuyers to receive this credit – even if you’ve already filed your 2008 tax return.

Ken Majerus, senior manager at accounting firm BiggsKofford, said the new credit is a rehash of the 2008 credit, which was less of a credit and more of an interest-free loan.

But the new version is actually a credit.

“As long as you hold on to the house for 36 months, you don’t have to repay the credit,” Majerus said, nor “recapture” it (add the amount back to taxable income).

The credit can only be used for a principal residence, but it’s not only for people who have never owned a home.

“First-time homebuyer means the buyer cannot have had an ownership interest in a home during the past three years,” Majerus said.

Qualifying taxpayers who purchase a home before Dec. 1 can claim 10 percent of the purchase price of the house up to $8,000 or $4,000 for married filing separately.

The IRS recommends these options:

• File an extension if you’re buying a home in the near future.
• File now and amend later.
• Amend an already-filed 2008 tax return.

Or claim the credit on your 2009 tax return, rather than 2008, if your income during 2009 will be less than in 2008.

To learn more about the tax credit, visit www.irs.gov or visit www.recovery.gov to read about the overall implementation of the Recovery Act.