The Federal Housing tax credit of 2009 was created as a result of the American Recovery and Reinvestment act and allows last year’s home buyers the opportunity to claim a tax credit for up to $8,000 on their 2009 taxes. This tax credit is available to first time home buyers and move up buyers. The first time homebuyer’s credit was available the entire year while the move up buyer’s credit only became available towards the end of 2009.

The first time homebuyer’s tax credit can be taken by first time buyers and is worth up to 10% of the purchase price of your home with an $8,000 limit. This tax credits is fully refundable and does not have to be repaid unless you fail to own your home for at least three years. If you sell your home before the three year period, you will have to pay your tax credit back to the government.
In November of 2009, the move-up buyer was created when the first time homebuyer credit was set to expire. This credit sweetened the federal housing tax credit by allowing move-up buyers to claim a fully refundable credit for 10% of the purchase price of your home, up to $6,500. This credit is available to homebuyers who currently reside in a home that they have owned for at least five years.
Both parts of the federal housing tax credit are excellent ways for you to save on your 2009 income taxes. You can claim your federal housing tax credit on your 1040 tax form. You will have to complete a worksheet in order to arrive at the amount that you are eligible for. If you have any questions concerning your ability to claim the federal housing tax credit, check out the official IRS website. Also, consult with your financial adviser if you have questions concerning the federal housing tax credits and your long term financial strategy.
Author: John Zinsky