If you have just recently purchased your first home or are considering purchasing your first home in the near future, you may be eligible for a large refundable tax credit.  For any first time homebuyers, there is an available credit for homes purchased after April 8, 2008 and before July 1, 2009.  The credit applies to first time homebuyers, as well as any person who has not owned a home in the last three years prior to their purchase.

The tax credit is equal to 10% of the purchase price of the home, but cannot exceed $7,500 ($3,750 for a married person filing separate).  The credit will have to be repaid over a 15 year period.  Due to the repayment plan, the credit acts much like an interest-free loan.  The credit is refundable, meaning even if you do not have a tax liability you will receive a refund check for the amount of the credit.  However, taxpayers must be aware that up to an additional $500 will be added to their tax liability each year for 15 years starting in 2010.

 The credit does have an income limit.  For a couple filing a joint return the phase – out begins if their modified adjusted gross income (MAGI) is $150,000 or more.  For other taxpayers the phase – out begins if their MAGI is over $75,000.  For more information on this credit or other tax issues, please contact any tax professional at SS&C Business & Tax Services, Inc.