With the economic situation being what it is, the government stimulus package made an attempt to affect positive change not only for businesses and banks, but also for common citizens. The First Time Homebuyer Credit was one of the measures the Obama administration implemented for that purpose.
Originally running from April 9, 2008 to July 1, 2009, the credit was extended allowing closings until the end of June, 2010. Implemented as a tax credit equivalent to 10% of the home’s purchase price, with a cap of $7,500 which were to be repaid over 15 years in equal installments, the credit was increased to $8,000 with no repayment required assuming the buyer remained in the home for at least 3 years.
An additional credit was made available to repeat buyers. This credit allowed homeowners who had remained in their homes 5 of the past 8 years to receive a credit when purchasing a new residence. The cap on this credit was $6,500. There was no requirement to sell the previous home in order to obtain the credit, just proof of intended residency.
Service members are still able to request an extension of the deadline for up to one additional year, but time is running out.
To receive the credit buyers were required to fill out IRS Form 5404, which included instructions for receiving the tax credit and the application for the deadline extension. The same form is to be used for repeat buyers wishing to obtain their credit. The maximum home price for either credit is $800,000.