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First-time homebuyers can take advantage of a huge break from Congress, but to get the tax break they need to buy a house soon if they haven't already.
A new credit is available for primary homes purchased between April 9, 2008, and June 30, 2009.
The credit is 10% of the purchase price of the home, with a maximum credit of $7,500 for either a single taxpayer or a married couple filing jointly.
First-time homebuyers are defined as those who have not owned a home in the three years prior to a purchase.
Single taxpayers with adjusted gross incomes up to $75,000 and married couples with adjusted gross incomes up to $150,000 qualify for the full tax credit.
The credit is phased out at a rate of $375 per $1,000 in income from $75,000 to $95,000 for singles and $150,000 to $170,000 for joint filers.
The tax credit works like an interest-free loan and must be repaid over a 15-year period.
An eligible taxpayer who buys a home and claims the maximum credit of $7,500 on his 2008 federal income tax return must begin repaying the credit by including one-fifteenth of this amount, or $500, as an additional tax on his 2010 return.
For more information, check this news release from the IRS.
Published Dec. 10, 2008
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