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Buyer Tax Credit

First Time Home Buyers Tax Credit

Back in February, President Obama signed into law the $8000 First Time Buyer tax credit. It comes with a few rules and according to the most recent analysis the following rules apply:

  • The deduction is worth 10 percent of a home’s value up to $8,000, which means all homes costing more than $80,000 could qualify for the maximum amount.
  • There is an income limit to qualify. A married couples’ modified adjusted gross income should be under $150,000 and single filers’ income should be less than $75,000. If married BOTH must be first time buyers.
  • Partial tax credits may be available for married couples with incomes over $150,000 but under $170,000, and single filers with incomes over $75,000 but under $95,000.
  • It’s a tax credit, not a deduction. That means the entire amount goes back to the first-time homebuyer unlike deductions, such as mortgage interest, that are subtracted from gross income before tax is calculated. If qualified for $8,000, the buyer gets $8,000 over and above any normal refund.
  • The tax credit applies to homes purchased between Jan. 1, 2009, and Nov. 30, 2009. The home MUST close on or before November 30th, 2009.
  • The tax credit does not have to be paid back, providing the homebuyer keeps the property for at least 36 months and resides in the home.
  • To qualify as a first-time homebuyer, the purchaser must not have owned a primary residence within the previous three-year period. Ownership of a vacation home or rental home does not disqualify the buyer. There is also an exclusion for recent divorcees with custody of children.
  • If purchasing a new home, the effective date to receive the credit is the first day the homeowner actually lives in the house. If construction began in 2008, that buyer could still qualify. And if construction begins in 2009 but the owner does not take possession until 2010, the buyer would not qualify.
  • The tax credit can be claimed on 2008 income tax forms even though the purchase took place in 2009 by amending your 2008 tax return. In other words, you can get access to your cash sooner.
  • The tax credit is not a down-payment program, but it could be used that way if the buyer plans ahead. There are local programs that can help you access the funds for down-payment purposes – contact Steph to discuss your situation.
Do I Qualify

















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