The American Recovery and Reinvestment Act of 2009, passed in February allows up to an $8,000 tax credit for first time home buyers who purchase a home between January 1, 2009 and December 1, 2009. If you are a first time home buyer who purchased a home on or after April 9, 2008 and by December 31, 2008, you are entitled to a $7500 tax credit. This is a modification of the Homeowners Relief Act of 2008, which allowed for a $7500 tax credit, but required it to be repaid. This no longer needs to be repaid.
The IRS defines a first time home buyer as someone who has not owned a principal residence during the three year period prior to the purchase. The tax credit is equal to 10 percent of the home’s purchase price up to a maximium of $8,000. You must complete the purchase before December 1, 2009. This means the last day to close on the home is November 30, 2009.
There is an income limitation. Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.