How to get the first time homebuyer tax credit

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Its that time of year … again. The time of year most of us dread because it means hunting down receipts and gathering forms so we can prepare our income taxes.

But if you were a first time homebuyer and purchased a Spring Texas home after April 9, 2008, you may be having a little extra green coming your way courtesy of our federal government and the Department of the Treasury.

The extra green in the form of a first time homebuyer tax credit is not automatic and unfortunately it does come with a few strings attached but it is still a good deal.

The first time homebuyer tax credit is a tax credit up to $7,500 which you have to pay back to our government over 15 years. Yes it is NOT free money. Instead it is the next best thing to free money which is an INTEREST free loan.

Is an interest free loan right for you? One of the best ways to find out is by reviewing your monthly bills and determining how much of your payments are going towards paying interest. Are you carrying credit card balances or do you have a student loan or do you have a car note? If so what is the interest rate? If the interest rate is higher than 0%, you can save yourself some money by taking the government up on their offer of a 15 year interest free loan. You decide on how to use the $7,500 by applying it to one or several of your bills.

But the money does not have to be used to pay off a bill. You can deposit the money into an interest bearing account and earn money off of the government’s money if you wish.

So how to get the first time homebuyer tax credit? The IRS has actually made the process relatively simple. You need to complete and file Form 5405 First-time homebuyer tax credit and file it with your Form 1040 tax return.

If you are a first time homebuyer and planning on purchasing a Spring Texas home before April 15th, 2009, you can take advantage of the first time homebuyer tax credit when filing your 2008 tax return. You do not need to wait until your 2009 tax return to take advantage of the tax credit.

If all of this sounds like mumbo jumbo, give your accountant a call for advice or give us a call at 281.300.3141 or 281.804.8626 and we will do our best to answer your questions.