First-Time Home Buyer Tax Credit
For first-time homeowners who need a little extra cash, there is a newly enacted legislation that provides a tax credit for as much as $7,500. Like most good things in life, they don't last forever, so first-time homeowners who want to take advantage of this opportunity need to act fast. Only homes purchased or built on or after April 9, 2008 and before July 1, 2009 are eligible.
Here are important factors associated with the tax credit:
What types of homes will qualify for the tax credit??
- The tax credit is available for first-time home buyers only.
- The maximum credit amount is $7,500.
- The credit is available for homes purchased on or after April 9, 2008 and before July 1, 2009.
- Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.
- The tax credit works like an interest-free loan and must be repaid over a 15-year period.
Any home purchased by an eligible first-time home buyer will qualify for the credit, provided that the home will be used as a principal residence and the buyer has not owned a home in the previous three years. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats.
Instead of buying a new home from a homebuilder, I have hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit??
Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been "purchased" on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after April 9, 2008 and before July 1, 2009.
For more information about the First-Time Home Buyer Tax Credit, please visit:
If you plan on running a business from your home, some of your home office expenses (mortgage, utilities, phone) may be deductible on Form 8829, IF that office is your principal place of operating that business. In claiming the expenses as deductions, it helps to show some business income. If you show a profit, the IRS is a lot less suspicious when you try to deduct expenses.