Help Topic:  First-Time Homebuyer / Home Owner Credit

There are two separate credits available for first-time homebuyers, depending on whether the home was purchased in 2008 or 2009. Both of these credits are claimed on Form 5405 and are outlined below.

As part of the Housing and Economic Recovery Act of 2008, the First-time Homebuyer Credit is available to qualified homebuyers who purchased a home in 2008.

The credit is 10% of the purchase price of a main home, up to a maximum of $7,500, but only half of that amount if married filing separately.

The credit is similar to an interest-free loan. Two years after receiving the credit, the taxpayer must begin repayment, which will be made in equal installments over 15 years as an additional tax on the taxpayer's tax return.

As part of the American Recovery and Reinvestment Act of 2009, there is now a credit for homes purchased in 2009 (before December 1, 2009) of up to $8,000 which must only be repaid if the home ceases to be your main home within the 36-month period beginning on the purchase date.

The credit is 10% of the purchase price of a main home, up to a maximum of $8,000 if you purchased the home in 2009, but only half of that amount if married filing separately.

This credit is not a loan and must only be repaid if the home ceases to be your main home within the 36-month period beginning on the purchase date.

The qualifications for a home and taxpayer to meet to qualify for either of these credits are covered in a series of questions in the interview or directly on the form.

To enter the data for either First-time Homebuyer Credit, which is calculated on Form 5405 and reported on line 69 of the 2008 Form 1040:

1. Log into your TaxACT Online return or start the TaxACT Desktop program
2. Access the Topic List
• Online:
  -Click on the 'Topic List' icon on the right side of the screen
• Desktop:
  -Click on 'Tools' in the menu and then 'Topic List' (the list will appear at the bottom of the screen)
3. Expand the Federal Q&A section by Clicking on the + sign to the left of Federal Q&A and then expand the Other Credits section
4. Click on First-time Homebuyer Credit

View IRS News Release IR-2008-106, Sept. 16, 2008 for additional information:
Tax Credit to Aid First-Time Homebuyers; Must Be Repaid Over 15 Years

Amending Your Federal Return to Include Tax Credit on Form 5405