First Time Home Buyers

Things to Know about the First-Time Homebuyer’s Tax Credit

1. $8,000 for New Buyers:  The credit is equivalent to 10 percent of the purchase price of the home and capped at $8,000.  It applies only to first time home buyers and principal residences. But unlike an earlier $7,500 home buyer tax credit, this one does not have to be repaid.
2. First time buyers defined: For the purpose of this legislation, a "first-time home buyer" is someone who hasn't owned a principal residence for three years before buying a house. (The date of purchase is considered the day that the title is transferred.) That means if you've owned a vacation home, but not a principal residence, within the past three years, you would still qualify for the credit.
3. 2009 buyers only: Only those who purchase a home on or after January 1 2009 and before December 1, 2009 are eligible for the credit (see below news on the extension through June of 2010).   Anyone who bought a home in 2008 won't be able to take advantage of it.
4. Income limits: The tax credit is subject to income limitations. Single buyers need a modified adjusted gross income of $75,000 or less to qualify for the full credit, or a total of $150,000 for married couples. Reduced credits may be available for those earning more.
5. Refundable: Because the tax credit is "refundable," qualified buyers can take advantage of it even if they don't have much tax liability. 
6. Returning the money: Buyers have to own the home for at least three years in order to keep the credit. If they sell the home before then, they will have to return the money to the government. (Exceptions will be made in certain cases, such as death or divorce.)

Latest on the Extended $8000 Tax Credit: