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First Time Home Buyers Tax Credit Explained

February 24, 2009 by · 5 Comments 

First Time Home Buyers – $8,000 first-time home buyers (or if you have not owned a home in 3 years) tax credit for qualified home purchases in 2009. This tax credit is specifically designed to encourage prospective home buyers to get off the fence.

What is the tax credit?

  • Does not have to be repaid, it is a true credit
  • Is fully refundable
  • Will remain in effect until Dec. 1, 2009 so that consumers can utilize it during the critical summer and fall home-buying months
  • Allows tax credit home buyers to participate in the mortgage revenue bond program
  • Permits state housing finance agencies to help buyers at closing by advancing the credit amount as a loan using tax-exempt bond proceeds

Other Key components that the legislation will create:

  • Help home borrowers by restoring the higher 2008 FHA, Fannie Mae and Freddie Mac loan limits through the end of this year (the limit will return to $729,750 from the current $625,500 in the highest cost markets, and will also rise in many other areas because the 2008 maximums were based on a more generous formula and, for most areas, higher median prices)
  • Temporarily allow exchange of Low-Income Housing Tax Credit allocating authority for tax-exempt grants and it appropriates $2 billion in HOME funding for affordable housing projects
  • Provide up to a 10-year deferral of tax due to business debt restructuring
  • Expand the net operating loss carry-back period from two years to five years for small businesses (businesses with average gross receipts of no more than $15 million over the prior three years) for losses arising in tax year 2008
  • Extend the 25C existing home remodeler credit through the end of 2010, increase the credit rate from 10% to 30%, raise the lifetime cap from $500 to $1,500 and expand the set of qualifying property
  • Provide an Alternative Minimum Tax patch for tax year 2009
  • Increase bonus depreciation and Section 179 small business expensing for business investment in 2009

This tax credit is available to you whether you purchase your property at a real estate auction, through a Realtor or on the private Nashville real estate market.

Related posts:

  1. First Time Homebuyer Tax Credit Extended & Expanded
  2. Senate Debates Extending First Time Buyer Credit
  3. Another Tax Credit for First Time Home Buyers
  4. Another Tax Credit for First Time Home Buyers
  5. First Time Home Buyers Tax Credit Explained

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