Enacted July 30, the Housing and Economic Recovery Act of 2008 was primarily designed to strengthen the regulation of and inject capital into the government-sponsored housing enterprises Fannie Mae and Freddie Mac. The goal was to help alleviate the subprime mortgage crisis by guaranteeing $300 billion in new 30-year fixed rate mortgages for subprime borrowers.

What is the First-time Home Buyer Tax Credit?

Part of this legislation provides a First-time Home Buyer Tax Credit for those who purchase a principle residence between April 9, 2008 and July 1, 2009. When you file your taxes for that year, you will be able to subtract the amount of the First-time Homebuyer Tax Credit from the total taxes you would have otherwise owed on your Federal income taxes or add it to your refund. For instance, if your 'normal' tax return would have left you owing $2,000 in taxes, the First-time Home Buyer Tax Credit could lower your liability by $7,500 so you would receive a $5,500 refund instead.

It isn't free money, however, but more like an interest free loan. You must begin repaying it in equal payments two years after claiming your First-time Homebuyer Tax Credit and must finish repayment for the full credit amount by the end of 15 years. If you sell the home before the credit is repaid, you'll have to pay the outstanding balance immediately.

Who qualifies for the First-time Home Buyer Tax Credit?

All first-time homebuyers who have never made use of a DC first-time homebuyer tax credit are eligible. To be considered a first-time home buyer, you (and your spouse, if married) may not have owned your principle residence for a 3-year period or longer before the purchase of your new home.

How big will your First-time Homebuyer Tax Credit be?

If you are single with an adjusted gross income that is less than $75,000 or married with an adjusted gross income less than $150,000, you are eligible for a First-time Home Buyer Tax Credit of 10% of your home purchase up to $7,500. The amount of the credit lowers with higher incomes.

For more information, such as understanding the benefits, precise credit value, and exceptions, continue reading here: First Time Home Buyer Credit Tax Break.

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Non-DC First-Time Home Buyer Tax Credit Info Making the Housing and Economic Recovery Act of 2008 Work For You

What is the Housing and Economic Recovery Act of 2008?

What is the First-time Home Buyer Tax Credit?

Who qualifies for the First-time Home Buyer Tax Credit?

How big will your First-time Homebuyer Tax Credit be?

Non-DC First-Time Home Buyer Tax Credit Info
Making the Housing and Economic Recovery Act of 2008 Work For You