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Time is Running For First-Time Home Buyer Tax Credit

First time home buyers can get up to an $8,000 refundable tax credit courtesy of the Federal government’s Housing and Economic Recovery Act of 2008 and expanded in 2009. So, what does it all mean?You have to purchase and close on the home before December 1, 2009 so there’s not much time left to find one, get financing and get it closed before then. If you’re building a home, you must be living it in by December 1, 2009.If you haven’t owned another primary home in the last 3 years, you are a first-time home buyer and you can get up to $8,000 (or 10% of the home price for homes less than $80,000) refunded to you at tax time. If you’re married, the law requires both of you to be eligible.For example, if you haven’t owned your principal residence in the last 3 years but your spouse did, you won’t qualify. If you owned a vacation home or rental property and didn’t use it for your primary home, you will qualify.If you would have gotten a refund, the $8,000 will be added onto it. If you would have owed taxes, you’ll get the difference. For example, if you owe $500, you’d get $7,500 back.This must be your primary residence and you have to live in it for 3 years (or you’ll have to pay it back) and you can’t buy it from a close relative. It’s OK if you rent out part of the house as long as you live there, too. It cannot be purchased for a rental or a vacation home.Any home that is going to be your primary residence will qualify including single-family detached homes, townhouses, condos, manufactured homes, even houseboats!You’ll get the money back when you fill out your 2009 taxes. Your tax preparer can help you with it or you can use IRS From 5405.If you are married and have an adjusted gross income (that’s not your take home pay) over $150,000 or single and have over $75,000 in adjusted gross income, you may be limited in using the $8,000 refundable tax credit. Again, your tax preparer can help you figure it out.Note that the Internal Revenue Service (IRS) has programmed its computer to be on the lookout for fraud. In a statement released at the end of July, the agency said it uses “sophisticated computer screening tools to quickly identify returns that may contain fraudulent claims for the first-time home buyer credit.”What’s different about this home buyer tax credit than the one that was available last year? This year, you don’t have to repay it! Last year, it was really a 15 year interest free loan.Can I use the credit as part of my down payment? If you’re getting an FHA-insured mortgage, you may be able to use the tax credit toward the home purchase and for certain closing cost expenses. Other agencies and non-profits have created plans to help you access the money before tax time. You can also reduce your income tax withholdings so that you’ll have more money in each paycheck. Note: this doesn’t affect your state income tax obligations.If you haven’t owned your primary home in the last 3 years, there’s not much time to dilly dally around. Find a realtor and purchase a home to qualify for up to $8,000 in tax credits.