Federal Tax Relief Programs For New Homeowners

If you are a first-time home buyer thinking of buying your first home, then the recent federal tax relief makes this an excellent time for buying a new home. Congress has authorized tax relief with tax credits for first-time homeowners with the American Recovery and Reinvestment Act of 2009. The act states you must be a first time homebuyer, or simply need have to have not purchased a home within the last three years, to qualify for the tax credit.

First Time Homeowner Tax Credit Guidelines

Under the 2009 act, first-time homebuyers are eligible for up to $8000 tax credits. If you owe taxes, than the credit will be given to offset the taxed amount. On the other hand, if you do not owe federal income taxes, the government will send you a check for the entire tax credit amount. In order to qualify for the tax credit, you must meet the following criteria:

  • Must be a first-time home buyer, or have not purchased a home within the three years preceding the purchase of the qualifying home;
  • You must purchase the home as  your primary residence, and the home cannot be rented out or used as a second home or vacation home;
  • You must purchase the home between January 1, 2009 and November 30, 2009;
  • You can only apply for the tax credit, if you purchased the house from someone that is not related to you;
  • Your maximum in yearly income should not exceed $75,000 if you are single or $150,000 if you're married and filing a joint return.

A tax credit is much more valuable to you as a homeowner than a tax reduction, tax deductions simply decrease the amount of taxable income on which you pay income taxes to the IRS; however, a tax credit is an actual reduction in the tax itself.

Other Types of Tax Relief

In addition to the tax credit, Congress also authorized an increased amount in homeowner deductions for people that do not itemize deductions on their federal income tax returns. The American Recovery and Reinvestment Act of 2009 differs from the tax relief act passed in 2008 by Congress and the Bush administration in that the tax credit does not have to be repaid. Under the 2008, tax relief act, Congress required that the tax credit be repaid in equal installments over a 15 year period. In order to get the tax credit, you simply apply it to your federal income tax return along with information and the required IRS forms regarding your new home purchase.