Homes for Sale on Staten IslandAs of today first time home buyer has about 5 months of time to cash in on the credit, on December 1st, 2009 the program ends. Here is the thing to remember, you must close on the home before that time.

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As rule of thumb on finding a home and going to the closing table, generally speaking has a 2-3 month window between placing an accepted offer and getting a home to closing. So let’s say you purchased a home in October of 09, you would be cutting very close in getting a home in time to qualify for the first time home buyer tax credit.

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Who is eligible for the Tax Credit and who is not?

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Well, if you’re a single home buyer with and income that sits below $75,000 or a married couple making under $150,000 per year the maximum credit is $8000 or 10% of the purchase price of the home. There is a modified tax credit for individuals and couples, but income cannot exceed $95,000 for an individual and $170,000 for a married couple.

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Does the First time home buyer tax credit need to be paid back?

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The answer is absolutely not. Unlike last years $7,500 tax credit which required repayment, the new tax credit does not. A little over a week now there was an announcement that the tax credit can be used as a down payment on a home purchase. While the details of the plan have yet to be fully released, it would likely be accomplished through what is known as bridge loan. However, individuals seeking this program should be aware a bridge loan is likely to carry a fee and/or interest. Consumers should also be aware of entities soliciting services to provide bridge loans for home down payments with future tax credit monies. When the details become clear, I will post them. However, as it stands now the $8000 or 10% purchase price credit up to a maximum $8,000 does not have to be paid back to the IRS.

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There are some restrictions.

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The home must be purchased as a primary residence and cannot be sold or used for investment purposes (i.e. Renting the property) within 36 months of purchase.

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Here are some resources you can use to answer some more detailed questions about the first time home buyer tax credit