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First‐time Homebuyer Tax Credit -RECOVERY ACT OF 2008

HOUSING AND ECONOMIC RECOVERY ACT OF 2008

Firsttime Homebuyer Tax Credit

FEATURE

H.R. 3221

Housing and Economic Recovery Act of 2008

Amount of Credit

Ten percent of cost of home, not to exceed

$7500

Eligible Property

Any singlefamily residence (including condos, coops) that will be used as a principal residence.

Refundable

Yes. Reduces income tax liability for the year of purchase. Claimed on tax return for that tax year.

Income Limit

Yes. Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000, respectively).

Firsttime Homebuyer Only

Yes. Purchaser (and purchaser’s spouse) may not have owned a principal residence in 3 years previous to purchase.

Recapture

Yes. Portion (6.67 % of credit) to be repaid each year for 15 years. If home sold before 15 years, then remainder of credit recaptured on sale.

Impact on District of Columbia Homebuyer Credit

DC credit not available if purchaser uses this credit.

Effective Date

Purchases on or after April 9, 2008

Termination

July 1, 2009

Interaction with Alternative Minimum Tax

Can be used against AMT, so credit will not throw individual into AMT

Posted: Thursday, July 31, 2008 9:27 AM by Ritu Desai

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