First-Time Homebuyer Credit

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Audio=20 files for podcast: English=20 | Spanish

Overview

First-time homebuyers may be able to take advantage of a = tax=20 credit for homes purchased in 2008 or 2009. The credit:

Applies to purchases that close after April 8, 2008, = and=20 before Dec. 1, 2009.
Applies only to homes used as a taxpayer's principal=20 residence.
Reduces a taxpayer's tax bill or increases his or her = refund,=20 dollar for dollar.
Is fully refundable, meaning the credit will be paid = out to=20 eligible taxpayers, even if they owe no tax or the credit = is more=20 than the tax owed.

The credit is claimed using Form = 5405.

For 2008 Home Purchases

The Housing and Economic Recovery Act of 2008 established = a tax=20 credit for first-time homebuyers that can be worth up to = $7,500. For=20 homes purchased in 2008, the credit is similar to a = no-interest=20 loan and must be repaid in 15 equal, annual installments = beginning with the 2010 income tax year.

For 2009 Home Purchases

The American Recovery and Reinvestment Act of 2009 = expanded the=20 first-time homebuyer credit by incre= asing=20 the credit amount to $8,000 for purchases made in = 2009=20 before Dec. 1.

For home purchased in 2009, the credit does not have to = be paid=20 back unless the home ceases to be the taxpayer's main = residence=20 within a three-year period following the = purchase.

First-time homebuyers who purchase a home in 2009 can = claim the=20 credit on either a 2008 tax return, due April 15, 2009, = or a 2009 tax return, due April 15, 2010. The credit = may not be=20 claimed before the closing date. But, if the = closing occurs=20 after April 15, 2009, a taxpayer can still claim it on a = 2008 tax=20 return by requesting an extension of time to file or by = filing an=20 amended return. News = release 2009-27 has more information on these = options.

Questions and Answers

More information is available in the quest= ion=20 and answer section.

Return to Tax=20 Provisions in the American Recovery and Reinvestment Act of=20 2009.

Page Last Reviewed or = Updated:=20 April 21, 2009