Maui Real Estate Blog
First Time Home Buyer Tax Credit
Last year, congress passed legislation that would provide a tax credit for first time home buyers in an effort to spur activity in the housing market. The credit was increased and improved upon for 2009. The following are some basic facts on the tax credit:
- The credit allows for a maximum direct deduction of $8,000 for first time home buyers. A first time home buyer is defined as a person who has not had an ownership interest in a home in the previous three years.
- The tax credit allows for a maximum deduction of $8,000 from your tax liability. For example, if you owed $10,000, you would be able to deduct $8,000 and end up with a remaining tax liability of $2,000.
- The size of the deduction is based in part on the purchase price of the home and the income of the buyers.
- The credit is applicable for buyers purchasing their principal residence.
For a more in depth review of the tax credit, check out the National Association of Realtors FAQ on the tax credit. This comprehensive resource has information on income restrictions, applying for the credit and real life examples.
If you are a first time home buyer thinking of taking advantage of the $8,000 tax credit, the window of opportunity is starting to narrow. The credit is good on home purchases completed between April 9, 2008 and December 1, 2009. Financing for most transactions takes between 45-60 days. Interested buyers should have a property under contract by October 1st at the very latest to make sure you complete the transaction in time to remain eligible for the credit. Contact us today if you are a first time home buyer on Maui who needs assistance with their purchase.