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$7500 First-Time Homebuyer Income Tax Credit
H.R. 3221.ENR. Sec.3011

This Tax Credit is now law. But first, let me give you some of the down-and-dirty facts!

The following are not eligible for the tax credit:

  • Non-resident aliens

  • Buyers who finance home with tax-exempt mortgage bond programs

  • If property is disposed of before end of tax year

  • If property ceases to be principal residence before end of tax year

  • If property is acquired from a person who is related* to the homebuyer

  • If modified Adjusted Gross income exceeds 95,000 (individual) or $170,000 (joint)

  • Credit phases out for individual Adjusted Gross Income between $75,000 - $95,000, and between $150,000 - $170,000 for joint filers (Special rules apply for Washington D.C.)

Contact your favorite loan officer or call the Regal Group for more

$7500 First-Time Homebuyer Income Tax Credit
Simplifying the Complicated
Further Definitions

1. First Time Homebuyer - The definition of "first time homebuyer" is NOT the same as it is for other government programs. Either your client had ownership interest in a primary residence with the last 3 years or not. And it's from settlement date to settlement date; the date of the sales contract is irrelevant.

2. Loan Types - Nothing about this is loan specific. It applies to FHA, VA, Fannie, Freddie, non-conforming, whatever.

3. Income Tax Credit - This is a tax CREDIT, and NOT a tax deduction. It doesn't matter if the qualified homebuyer's entire tax burden is less than $7,500 or even $0.00. However, tax returns must be filed to claim a refund.

4. Purchase from "Related" person Ineligible - I wish I could help more, but the part about buying from a "related" person is mixed up in all kinds of tax codes. If you have a client buying from any type of relative - they've got to talk to an accountant.

5. House becomes NOO - It's clear, the second the home becomes non owner-occupied or sold, the whole remainder of the credit is "called in due". What's great is that if the borrower buys another primary residence within two years, they go back to the "15 year payback" schedule. It's another matter for an accountant to facilitate this transaction on the homebuyer's tax returns. But it's also a selling point for someone who's serious about using this credit.

6. Recapture sell home - Very nice to know that the borrower doesn't have a pay back if the homebuyer loses money on the home. Or that the maximum total recapture, including what they've already paid, is limited to the actual gain when/if they sell the home. (Accountant time again.)

7. Municipal Bond Loans - Can't do it. If the borrowers finance using a bond program such as the State Housing Program, etc., they do NOT qualify for this credit.

Notice and Disclaimer: This is written and condensed from HR 3221, the "Housing and Economic Recovery Act of 2008," which was signed into law by President Bush 7-30-08. This particular section is relative to IRS tax code. The Regal Group worked diligently to accurately analyze and make sense of the legislation. We worked hard to provide information that is trustworthy and of benefit to you, but none of the parties presenting this information is an attorney or an accountant and do not guarantee the interpretations. Any actions you choose to take on the information provided should first be approved by legal or financial counsel.

The Regal Group LLC "Striving for Real Estate Excellence"


We are located at 4646 Poplar Avenue,
Suite 304 Memphis, TN 38117

Phone # 901.682.8561
Fax # 901.682.8642

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