First-time home buyers can get an $8,000 tax credit

This may be the perfect time to buy a first home.

Interest rates are at a all-time low and now the Internal Revenue Service is encouraging first-time home-buyers to purchase a home by giving them an $8,000 tax credit.

“This is a very good time to buy a home,” said James Noel, owner of Sunrise Realty. “The tax credit is one of the bright spots in the Stimulus Bill..”

Abbeville certified public account Lloyd Dore said, “It is a good program. If someone may be having trouble financing a house, this will help them.”

The credit is from Jan. 1, 2009 until the end of the year.

The way the credit works, according to CPA Rob Carter, is after you file your income taxes, and you are getting $1,000 back on your returns, now, because of the tax credit, you can get an extra $8,000.

If you owe Uncle Sam $10,000 in back-taxes, and you are first time home-buyer, the IRS may subtract up to $8,000 of the $10,000 you owe.

“It puts money back in your pocket,” Carter said.

Taxpayers who purchased a home after April 8, 2008, and on or before Dec. 31, 2008 can claim the credit on their 2008 tax returns; the maximum credit is 10 percent of the purchase price, up to $7,500, or $3,750 for married individuals filing separately.

First-time buyers in 2009 can claim a credit worth $8,000 - or 10% of the home’s value, whichever is less - on their 2008 or 2009 taxes. A big plus is that the credit is refundable, meaning tax filers see a refund of the full $8,000 even if their total tax bill was less than that amount. The revised provision applies to homes purchased on or after January 1, 2009 and before December 1, 2009. Buyers may not have owned a home for the past three years to qualify as “first time” buyer. They must also live in the house for at least three years, or they will be obligated to pay back the credit.

Both CPAs encourage first-time buyers to check with their accountant after purchasing a home.

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