In July of 2008, President Bush signed a major housing bill (H.R. 3221) into law. As part of the housing bill, Congress has created a new, temporary tax credit to provide an incentive for first time homebuyers. The $7,500 credit will be available for the purchase of a principal residence on or after April 9, 2008 and before July 1, 2009.
This information has been based on the 7-30-08 Tax Bill and as with any law maybe subject to change.
Any Tax Credit is typically used to offset any taxes the new homeowner may be set to pay in. For example, after you complete your taxes you are supposed to pay in $6,000. If you were/are a first time homebuyer and have or will purchase a home within the above mentioned time frame, you would qualify for the credit. You then would be eligible for the difference of the pay in and the credit meaning in this case a refund of $1,500.
Restrictions with the tax credit are as follows:
Single 1040 filing status > $75,000
Joint 1040 filing status > $150,000
10% of the purchase price of the home (example $40,000 purchase = $4,000 credit)
This is the majority of the information for the tax credit but is always subject to changes. If you have any questions or would like more info – please feel free to email or call anytime (651-468-9099).