The original first-time homebuyer credit enacted in 2008 provided what was essentially a $7,500 interest-free, fifteen-year loan. The credit has been enhanced for 2009 by raising the credit amount to $8,000 ($4,000 married separate) and removing the repayment requirement, except in cases where the home is sold or ceases to be the taxpayer’s principal residence within 36 months of its purchase. The home must be purchased between January 1, 2009 and before December 1, 2009. It must be located in the U.S, and not purchased from a close relative. The taxpayer can choose to claim the credit on either his or her 2009 return or the original or amended 2008 return.
Taxpayers wishing to take advantage of this provision should act quickly. A taxpayer is considered a first-time homebuyer if he (or spouse, if married) had no present ownership interest in a principal residence in the U.S. during the three-year period before the purchase of the home to which the credit applies.
The purpose of the credit is to assist lower-income individuals in acquiring their own home. Thus, the credit is reduced or eliminated for higher-income taxpayers. For a married couple filing a joint return, the phase-out range is $150,000 to $170,000. For other taxpayers, the phase-out range is $75,000 to $95,000.
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