Congress has created a temporary federal income tax credit available to first time home buyers as a part of the “Housing and Economic Recovery Act of 2008”.
The amount of the federal tax credit is for 10% of the cost of the home, up to a maximum credit of $7,500. In essence, this is an interest-free loan that enables consumers to receive a tax credit on a dollar-for-dollar basis on their personal income tax return in the calendar year following the year of closing on their home. They begin paying the tax credit back the year after that and make equal installments during the next 15 years. If the homeowner sells the home at any point during the 15-year payback period, then the remaining amount is recaptured, unless they sell the home at a loss, at which point the balance is forgiven.
Now is the time for a first time home buyer to make their purchase! For more details please visit The National Association of REALTORS(R).