Learn more about the first-time homebuyer tax credit

Sponsored by: MNAR

With home sales in Minnesota increasing, the deadline approaching to receive the first time homebuyer tax credit, many potential home buyers are looking for more information on the tax credit.

Here are a few basics on what is available.

The first-time homebuyer tax credit provides for a tax credit equal to ten percent of a home’s purchase price up to a maximum of $8,000. For example, a $70,000 home purchase in Minnesota would receive a credit of $7,000 and a $150,000 home would receive the maximum credit of $8,000.

The tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. The purchase date is with the closing of escrow.

There's an income limit for applicants. The full amount of credit is available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). The tax credit phases out above those caps, meaning that the amount is reduced until the income level is $95,000 and no credit is available for people making more than that income level.

And just like the name implies, the tax credit is for a person's first home. The purchaser (and purchaser’s spouse) may not have owned a principal residence in 3 years previous to purchase.

The credit does not require repayment. Most of the mechanics of the credit will be the same as under the 2008 rules: the credit will be claimed on a tax return to reduce the purchaser's income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.

Because many people are looking to buy homes with the assistance of the first-time homebuyers tax credit, Congress looking to extend the program. But as it currently stands, the final sale date is still December 1st, 2009.

If you're interested in purchasing a home with the tax credit, speak with your realtor or find more information on the website of the Minnesota Association of Realtors.