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 Credit

    An amount of money that a taxpayer is able to subtract from the ...
  4. Refundable Credit

    A tax credit that is not limited by the amount of an individual's ...
  5. PATH Act

    The Protecting Americans from Tax Hikes (PATH) Act was created ...
  6. Mortgage Credit Certificates

    A certificate provided by the originating mortgage lender to ...
Related Articles
  1. Taxes

    The Truth About The First-Time Homebuyer Tax Credit

    The $8,000 tax credit might be the push you need to buy your first house, but there are some things you need to know first.
  2. Investing

    Special Benefits for First-Time Homebuyers

    To encourage Americans to buy their first homes, the government offers credits and tax breaks. Here's the lowdown on who can qualify for each benefit.
  3. Investing

    First-Time Homebuyer's Guide

    Buying a home for the first time can seem daunting. Learn the buying process & what to watch out for in order to be a successful first time home buyer.
  4. Taxes

    Give Your Taxes Some Credit

    A few tax credits can greatly increase the amount of money you get back on your return.
  5. Personal Finance

    5 Tax Credits You Shouldn't Miss

    If you're not taking advantage of these deductions, you could be missing out on tax savings.
  6. Investing

    House Prices Up? How to Find a Home

    With housing affordability slipping in many areas across the nation, first-time buyers are struggling to find a home that fits their budget. What to do?
  7. Personal Finance

    Tax Credits That Can Get You a Refund

    Here are a few of the credits that may result in a refund check, even if you owe no taxes this year.
  8. Personal Finance

    Are You Taking Advantage of the College Tuition Tax Credit?

    Parents with a child enrolled in college should check out the college tuition tax credit, a boon that can help defray the cost of a university education.
  9. Taxes

    Top Tax Refunds For Recent Grads

    Don't miss out on these tax credits if you have recently graduated.
  10. Investing

    10 Steps For First-Time Home Buyers

    It's probably the biggest purchase you've ever made. Here's exactly what to do to prepare yourself and get the best possible deal.
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. 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 >>
  3. 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 >>
  4. 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. Free Cash Flow - FCF

    A measure of financial performance calculated as operating cash flow minus capital expenditures. Free cash flow (FCF) represents ...
  2. Leverage Ratio

    Any ratio used to calculate the financial leverage of a company to get an idea of the company's methods of financing or to ...
  3. Two And Twenty

    A type of compensation structure that hedge fund managers typically employ in which part of compensation is performance based. ...
  4. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying ...
  5. Expense Ratio

    A measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual ...
  6. Mezzanine Financing

    A hybrid of debt and equity financing that is typically used to finance the expansion of existing companies. Mezzanine financing ...
Trading Center