Congress passed a law last year that allows you, if you are buying your first home, to claim a special tax credit only for first time home buyers.  You qualify if you haven’t owned a home in the last past three years, if you earn under $75,000 a year for a single person and $150,000 a year for a married couple, and if you purchased the home between April 9, 2008 and July 1, 2009.  You must purchase the home for your own use (you cannot purchase the home to rent it out).

The tax credit actually will pay you the $7500 at the time you file your tax return.  If you buy this year, for example, you could claim the $7500 credit at the time you filed your tax return next year.  However, the credit is not a true “credit”.  It really is an interest free long term loan that must be paid back over the next 15 years.  You would pay $500 per year for 15 years.

You could use the tax credit to fix up the home or if you asked a relative to assist you with down payment money for the home, you could pay back your relative with the tax credit money.  Congress hopes that this tax credit will help more first time home buyers be able to buy their first homes.

For more detailed information, come to our FREE NO OBLIGATION FIRST TIME HOMEBUYER class or wait for future blogs.  “Simple answers to home ownership questions”.