The first-time home buyer tax credit is a specific provision to incentivize the purchase of a first home through the United States tax code. The U.S. government began the first-time homebuyer credit program in 2008, and in 2009, it was extended to offer the tax credit money to buyers through April of 2010. After that time, the tax credit program was discontinued.
Several specific requirements applied to eligibility for the first-time home buyer tax credit. Those who were able to apply for the tax credit had to buy within the specified time frame. The property also had to be the first residential real estate purchase for the individual holding the title to the property. Other procedural requirements applied to the first-time homebuyer credit that were explained to the U.S. public through IRS documents and other resources.
As an additional safeguard to ensure that those who were taking advantage of the first-time homebuyer credit were actually purchasing their own home, the U.S. government wrote an additional stipulation into the eligibility for the tax credit. Requirements for the tax credit state that those who received the tax credit must remain living in the home as their primary place of residence for a period of three years. Anyone who moves out, rents the property, or sells it before the allotted three years must return the entire tax credit.
The U.S. first-time home buyer tax credit program was part of a larger plan to jumpstart the housing economy in the country after a financial crash and a period of “recession” jeopardized the nation’s economic health. The federal United States government also began programs for bailing out banks and other institutions, and promoting loan modification agreements between lenders and homeowners who were unable to pay their mortgages. Some of these programs continue, although many have been terminated or modified in the years since they were enacted.
The first-time homebuyer credit got different responses from various finance professionals, real estate professionals, and other experts within the US. Some saw the program as supporting a potentially failing housing market during the time that home buyers received the credit. Others pointed to the period directly after the expiration of the tax credit as a negative effect on the housing market that was at least partially due to the first-time homebuyer credit program. Now that the credit is no longer in place, long-term United States mortgage systems called FHA loans still offer those with limited income the means to consider purchasing a home without a large amount of capital for a down payment.