Did you purchase a home last year? If so, you may be eligible to receive the federal housing tax credit on your 2009 income taxes. This tax credit is available to both move-up buyers and first time home buyers. Claiming the credit is simple to do when filling out your income taxes. It is as simple as completing a worksheet and entering the amount into your 1040 tax form. The two credits that are available for the 2009 year are the $8,000 credit and the $6,500 credit. Both credits are fully refundable and do not have to be repaid. Other restrictions apply to these tax credits.


The first time homebuyer’s tax credit was available all of last year and continues into the 2010 tax year. This credit is worth 10% of the purchase price of your home up to $8,000. If you purchase a home that exceeds $80,000, you will only be able to claim the $8,000. This credit is fully refundable; meaning that you will receive 100% of the credit exceeds your tax liability. An important factor to consider when claiming the tax credit is the length of time that you plan to spend in your home. If you can not see yourself in your home three years from the purchase date, you may not want to accept this credit. Failure to remain in your home for at least three years will result in you having to repay the credit.

The move-up tax credit was not available until the end of last year. With this credit, you must have owned your previous home for five consecutive years. This credit is worth $6,500 and is fully refundable. Like the First time home buyers tax credit, you must remain in your new home for at least three years to avoid repayment.

Author: John Zinsky