First-time Homebuyer Gets Tax Credit Relief

Today, President Bush signed the recently-passed housing legislation (H.R. 3221) into law. This first-time homebuyer tax credit is now in effect. What does that mean for first-time homebuyers here in Louisville, Kentucky? I’m glad you asked!

FEATUREH.R. 3221 – Housing and Economic Recovery Act of 2008
Amount of CreditTen percent of cost of home, not to exceed
Eligible PropertyAny single-family residence (including condos, co]ops) that will be used as a principal residence.
RefundableYes. Reduces income tax liability for the year of purchase. Claimed on tax return for that tax year.
Income LimitYes. 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).
First-time Homebuyer OnlyYes. Purchaser (and purchaser’s spouse) may not have owned a principal residence in 3 years previous to purchase.
RecaptureYes. 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 CreditDC credit not available if purchaser uses this credit.
Effective DatePurchases on or after April 9, 2008
TerminationJuly 1, 2009
Interaction with Alternative Minimum TaxCan be used against AMT, so credit will not throw individual into AMT.
Source: Greater Louisville Association of Realtors