It is official as Senate voted to give a tax break of up to $15,000 to homebuyers to help housing market.
The new tax break would give home buyers a tax credit of 10 percent of the price of a primary residence purchased within a year, up to $15,000 to stabilize housing market and prevent foreclosures.
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A first time home buyer is defined as any individual who had no ownership interest in a principal residence during the three years prior to the house purchase. Rental property, vacation home or undeveloped land does not qualify you from claiming this credit.
The credit must be repaid in installments over a 15 year period. Repayment would begin two years after the year in which the credit is claimed.
If house is no linger used as primary residence, or sold, the repayment is accelerated. The credit is for taxpayers who’s gross income is between $75,000 and $95,000 ($150,000 to $170,000 for joint fillers)
The credit will be claimed on your 2008 tax return with Form 5405. If you purchase home in 2009, you can opt out to file an amended 2008 return to claim the credit.
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