Part of housing bill (H.R. 3221) recently signed by President Bush includes a temporary tax credit as an incentive for first-time homebuyers.  Here is a brief overview of this new incentive. 

  • Only applies to a principle residence purchased on or after April 9, 2008 and before July 1, 2009.
  • Only available to first-time homebuyers. (First-time homebuyer is someone who has not had ownership interest in a home in the previous 3 years).
  • There is an income restriction.  $75,000 for individual, $150,000 for joint filers.  After that the credit phases out which max being at $95,000 for individual and $170,000 for joint.
  • Amount of credit is tied to price of home.  Can not be more than 10% of cost of the house.
  • Not a true rebate.  Has to be paid back over a period of 15 years however there is no interest on the outstanding balances.  If you sell the house before 15 years and realize a gain, the remainder due will be deducted from your proceeds and given to the IRS. 
  • This is a credit you receive when filing your taxes.  There is no money offered up front or at closing to be used as down payments or for settlement fees.  The credit is claimed on your tax return.

 Please note that this is just a brief summary.  For more detailed information visit the First-Time Homebuyer Tax Credit website provided by National Association of Home Builders (NAHB) or GovTrack.us H.R. 3221.