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Summary of first-time homebuyer tax credit

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7. Your modified adjusted gross income, or MAGI, on your federal tax return must be less than $75,000 if you're single or a married head of household, or $150,000 if you're married and filing a joint tax return with your spouse. MAGI is a technical term that's defined by the IRS, so you should consult a tax professional if you're not certain you meet this test.

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8. If you're single or a married head of household and your MAGI is more than $75,000, but less than $95,000, you may get a partial credit subject to a complicated formula. The same is true if you're married, filing jointly, and your MAGI is more than $150,000, but less than $170,000. If your MAGI is more than those limits, you're not eligible.

9. Technically, the credit is equal to 10 percent of the purchase price of the home, up to a maximum of $7,500. Thus, if the home is worth less than $75,000, the maximum credit is 10 percent of the price, and if the home is worth $75,000 or more, the maximum credit is $7,500. Married couples who file separate tax returns can claim half the credit on each return.

10. The home must be purchased on or after April 9, 2008, but before July 1, 2009. Since the law was enacted July 30, 2008, part of that time frame is retroactive. That means if you already bought a home after April 9, 2008, but before July 30, 2008, you can still take the credit.

11. If you buy a home in the first half of 2009, you can elect to claim the credit on your 2008 tax return. That way, you'll receive the money sooner, but the payback schedule will begin sooner as well. Tip: If your MAGI is over the limit for the full credit in either 2008 or 2009, you can claim the credit in the other year to maximize your benefit.

12. The credit cannot be used with mortgage-revenue bond financing or the Washington, D.C., first-time homebuyer tax credit.

For more information, check these two resources:

National Association of Home Builders:

National Association of Realtors:
First-Time Homebuyer Tax Credit - FAQ
Housing and Economic Recovery Act of 2008's corrections policy-- Posted: Sept. 18, 2008
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