First-Time Homebuyer Tax Credit

POSTED: Wednesday, March 18, 2009 - 7:17am

UPDATED: Wednesday, February 17, 2010 - 2:23pm

Home sales across the country are down, but a new move designed to lure buyers, could earn first-time homebuyers thousands of dollars in tax credit. It is part of President Obama's stimulus package.

Here is how it works: first-time homebuyers, meaning anyone who has not purchased a home in the past three years, will be eligible for a tax credit worth up to $8,000 if they buy a home between now and December 1st.

Any home purchased for $80,000 or more qualifies for the full amount. If the house costs less, the credit will be 10% of that cost.

"So for instance, if someone were to purchase a $75,000 home, they would only get $7,500 worth of tax credit," explains local realtor, Suzy Shewmaker Hicks.

So how do you get the money? The credit will be claimed on your tax return to reduce your income tax liability. Any money that is left over, will be given to you in a check.

"It's strictly between them and the IRS, so the lender isn't going to give them the tax credit . It's strictly on their taxes," says Hicks.

This tax credit does not require any repayment. That is unless, the home is sold within three years from when it is purchased. In that case, the credit will have to be paid back.

But, there are some limits.

"If an individual makes over $75,000 a year, or a couple makes over $150,000 a year, there will be some restrictions on this, but certainly most people in El Paso are going to qualify," says Hicks.

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