First-time Homebuyer Tax Credit
As part of the Housing and Economic Recovery Act of 2008, a First-time Homebuyer Tax Credit is now available. This special tax break ends in mid-2009.
Eligiblitity: First-time homebuyers who purchase a principle residence on April 9, 2008 and before July 1, 2009 are eligible. If you (and your spouse, if married) have not owned your principle residence for a 3-year period before your purchase, and you have never taken advantage of the first-time homebuyer credit, you qualify as a first-time homebuyer.
How it works: Like all tax credits, it will directly reduce the total amount of taxes you owe. When you file your taxes, for the year you purchased your home (2008 or 2009), you will be able to subtract the amount of the credit from your Federal income tax liability, increasing the size of your refund or reducing the amount you owe. For example, you file your 'normal' tax return and find that you owe $2000 in taxes. With this credit, your tax liability could be lowered by $7500 - which means, you instead get a $5500 tax REFUND check from IRS.
To learn more about this tax credit, please download this file provided by the National Association of Realtors: h.pdf (118.80 kb)