First time homebuyers purchasing a new or pre-existing home may be eligible for a tax credit up to $7,500* for a married couple filing jointly or a single individual, or $3,750* for a married couple filing separately.
- Loan must close on or after April 9,2008 and before July 1, 2009
- Property type must be a single family detached home, townhouse or condominium
- Income for borrowers must not exceed $75,000 for single tax payers and $150,000 for married couples
- Property must be a primary residence
- Borrower(s) must not have owned a home during the past 3 years
*amount of the credit will be recaptured over 15 years unless the property ceases to be the homebuyers principal residence, or the property is disposed of at which time repayment of the total credit must be made.
Common Questions & Answers
Q: Who is eligible to claim $7,500 tax credit?
A: First time homebuyers purchasing new or pre existing homes. Must be used as primary residence.
Q: Can the tax credit be claimed if the home is purchased under a mortgage revenue bond (MRB) program?
A: No. The tax credit cannot be combined with the MRB program.
Q: Are there income limits to determine who is eligible to take the tax credit?
A: Yes. Homebuyers who file their taxes as single or head-of-household taxpayers can claim the credit if their modified adjusted gross income (MAGI) is less than $75,000. For married taxpayers filing a joint tax return, the MAGI limit is $150,000. The limit is based on the buyer’s modified adjusted gross income for the year that the house is purchased, except for certain purchases in 2009.
Q: Does the credit amount differ?
A: Yes. The credit is in general equal to $7,500 for a qualified home purchase by a married couple filing jointly or a single homebuyer. A homebuyer who is married but filing separately qualifies for a $3,750 credit. The credit amount is also prorated based on income.
Q: Does the credit have to be paid back to the government? If so, what are the payback provisions?
A: Yes, the tax credit must be repaid. Homebuyers will be required to repay the credit to the government, without interest: over 15 years, when they sell the house if there is sufficient capital gain from the sale, or when they cease to use the house as their primary residence.