Today, there is no longer a first-time home buyer tax credit that allows you to receive a federal tax credit over a three year period. The good news is that there are several local and state efforts that can help take the place of the popular program.
What was the Federal First-Time Home Buyer Tax Credit?
It was a program that was designed to help spur growth in real estate for those that hadn't purchased a home before. The program started during the housing recession and ended after the year 2009. It provided up to 10 percent of your home's purchase price in tax credit relief on your taxes as a way of offsetting the cost of closing and paying for a home for first-time buyers.
The program was very popular because instead of having strict guidelines, it was open to many people that qualified through its interpretation of first-time home buyer. One example of this is that if you were married and buying a home, if the husband had previously bought a home and the wife hadn't, it wouldn't matter and the family would still qualify because the wife was a first-time home buyer. Another exception that was worked into the plan as it went along was the notion that you could have already owned a home for several years, but if you had not owned a home for the previous 3 years, you could be considered a first-time home buyer if you met certain guidelines.
Why did the program end?
The program was put into the American Recovery and Reinvestment Act of 2009. Simply put, the intent of the program was to try and encourage people to invest in houses at a time when the housing market was severely depressed. By offering Americans the option of financing their house with up to 10 percent of the purchase price being able to be used as a tax credit, the thought was it would spur home sales. In fact, over 2 million Americans managed to take advantage of the new program and the government reported a sharp increase in the numbers of homes that were sold during the period of time that the program was active.
The program expired in 2010 for new purchases because the housing market had recovered enough that it could stand on its own. Like the US government's incentive program for buying new cars, the housing program was so successful that when it was ended, the real estate market caught a slight cold again because it no longer had the same number of people attempting to qualify for sums of money.
Filing if you qualified and didn't know about it:
Although the program is over, if you are restating previous years tax forms this year, you might contact the IRS before you do so to see if they will retroactively grant first-time home buyer status. There was no shortage of controversy during the program regarding qualification and partway through, the IRS gained the ability to set more stringent qualification rules.