$7,500 Tax Credit Available to First-Time Homebuyers

This tax credit is not a gift or a grant but essentially a 15 year loan to the homebuyer and, while it is interest free, will require filing a tax return and will carry the same IRS penalties for non-payment as accrue to delinquent taxes.

Warnings duly noted, further information and the regulations regarding this tax credit are now available. If you have an interest in the program, here are some basic facts.

The credit is available only to first-time homebuyers defined as buyers who have not owned a principal residence for three-years prior to the subject purchase. The ownership test applies to both partners in a marriage; i.e. if a husband has not owned a home in the past three years but the wife has, neither spouse qualifies for the first-time home buyer tax credit. A buyer can still be eligible for the credit even if he owns a vacation home or rental property not used as a principal residence.

There is no need to fill out an application to qualify for the tax credit. First-time homebuyers merely claim the credit when filing the tax return for that year. No pre-approval is necessary, but if you are relying on this program to purchase a home you may want to check your eligibility. Your tax advisor may be able to help.

But like so many good things in life, time is of the essence for buyers who want to take advantage of this opportunity. Only homes purchased on or after April 9, 2008 and before July 1, 2009 are eligible. Information on these and other details of the program can be researched on a website maintained by the National Association of Homebuilders at www.federalhousingtaxcredit.com.