First-Time Homebuyer Tax Credit

Loading the player...

DEFINITION of 'First-Time Homebuyer Tax Credit'

A refundable tax credit made available to Americans purchasing their first home. The first-time homebuyer tax credit originally applied to home purchases made by qualified first-time buyers between April 9, 2008, and July 1, 2009. However, the Obama administration extended the original time frame requiring homeowners to have a signed sales contract until May 1, 2010, and gave them until the end of June, 2010, to close the transaction.

BREAKING DOWN 'First-Time Homebuyer Tax Credit'

The original tax credit implemented a credit of 10% of the home's purchase price, up to $7,500, which had to be repaid over 15 years in equal installments. However, the expanded version of the tax credit increased the maximum to $8,000 and removed the repayment requirement altogether, as long as the buyer stayed in the home for at least three years.

RELATED TERMS
  1. Form 5405: First-Time Homebuyer ...

    A tax form distributed by the Internal Revenue Service (IRS) ...
  2. Longtime Homebuyer Tax Credit

    The Longtime Homebuyer Tax Credit was a federal income tax credit ...
  3. Tax Break

    A tax break is a savings on a taxpayer's liability. A tax break ...
  4. Refundable Credit

    A tax credit that is not limited by the amount of an individual's ...
  5. American Opportunity Tax Credit

    A tax credit that enabled more student and parents to pay for ...
  6. First-Time Home Buyer

    An individual who is purchasing a principal residence for the ...
Related Articles
  1. Personal Finance

    First-Time Homebuyer Tax Credit Is Extended

    It's been a tough year for the broad economy, but the fact that we've emerged from the brink of economic collapse gives us plenty to be grateful for.
  2. Home & Auto

    Credits For First-Time Homebuyers

    Tax credits, grants, and other options can help first-time homebuyers afford their purchase. They just need to know where to look.
  3. Credit & Loans

    Millennials Guide: Buying Your First House

    Millennial homebuyers need to research a lot of things, such as how much to pay, down payments, PMI, FHA loans and special programs for first-time buyers.
  4. Professionals

    Tax Credits

    Tax Credits
  5. Home & Auto

    First-Time Home Buyer? Avoid These 10 Mistakes

    These 10 mistakes can prove very costly for first-time home buyers.
  6. Home & Auto

    5 Mistakes to Avoid When Buying a New Home

    Learn about home ownership and some of the pitfalls a potential homebuyer faces. Understand five specific mistakes all homebuyers should avoid.
  7. Real Estate

    Can I Afford a House in 2016?

    Start the homebuying process in 2016 before mortgage rates increase. More sellers are expected to list their homes, resulting in less competition for buyers.
  8. Home & Auto

    Homebuyers' Walkthrough: Reasons to Buy

    Homeownership is an option for many people who are ready to settle down and who are willing and able to meet the financial obligations of a mortgage. While it involves a commitment in terms of ...
  9. Budgeting

    Acquire Territory

    How do you plan to spend your refund this year? We provide some smart suggestions.
  10. Taxes

    How To Get The Most Money Back On Your Tax Return

    Many people pay more taxes than they have to simply because they don’t know better. Here are a few suggestions for getting the most out of your tax return.
RELATED FAQS
  1. How does the American Housing Rescue and Foreclosure Prevention Act of 2008 affect ...

    The passage of the American Housing Rescue and Foreclosure Prevention Act of 2008 at the end of July 2008 made about $15 ... Read Answer >>
  2. What is the difference between a write-off and a deduction?

    Understand the differences between a tax write-off and a tax deduction. Learn how each one works to reduce income taxes and ... Read Answer >>
  3. My Traditional IRA has been converted to a Roth IRA. Can I still make a qualified ...

    If you converted the funds less than five-years ago, you will not be able to meet the qualified distribution requirements. ... Read Answer >>
  4. My wife and I both converted our Traditional IRAs to Roth IRAs in Dec 1998 and have ...

    You and your spouse each qualify for a penalty-free distribution of up to $10,000 for the purchase, acquisition or construction ... Read Answer >>
  5. What are some examples of a good time to take out a home equity line of credit (HELOC)?

    Determine if a home equity line of credit (HELOC) is right for you by looking into the most common and ideal uses of these ... Read Answer >>
  6. Is it possible to have a credit limit that's too high?

    Avoid these pitfalls when working with high credit limits, and learn how to increase your credit score by increasing your ... Read Answer >>
Hot Definitions
  1. Goodwill

    An account that can be found in the assets portion of a company's balance sheet. Goodwill can often arise when one company ...
  2. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. ...
  3. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  4. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  5. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  6. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
Trading Center