Fiscal Tax Blog

If you bought a home for the first time in 2008, we hope you were jumping for joy as you joined the ranks of home owners.  But even if you weren't, this year's tax code has a tax break that might have you jumping for joy anyway.

Thanks to recent tax legislation, first time home buyers can claim a refundable tax credit of up to $7,500 ($3,750 if married filing separately) for homes purchased after April 8, 2008 and before July 1, 2009.

Even if you become a first time home buyer next year (in 2009, but before you file your taxes), you can elect to claim the credit on your 2008 taxes.

If your Adjusted Gross Income is $75,000 or less ($150,000 for married filing jointly), you're entitled to the full credit.  Adjusted Gross Incomes over this amount have the credit gradually phased out.

This credit essentially functions as a 15-year interest free loan with 1/15th of the credit recaptured annually beginning 2 years after the year of purchase.

If you claim the credit and then sell your home before the end of the 15 year payback, the IRS could recapture some of the credit.

Can't take advantage of this tax break?

Check out our list of 40 Tax Breaks that you could use to get your largest tax refund ever in 2009.

Have a question about this tax break?

Leave a comment below and we'll get you an answer that could save you money on your tax return this year.