$8,000 Home Buyer Tax Credit

There has been a lot of confusion about the Tax Credit that was passed for home buyers in the recent stimulus passed by our government. So, hopefully this will help clear some things up about. This is actually a great program for 1st time homebuyers. If you have never owned a home or it has been awhile since you have owned a home, this is really something you need to look at this year!

There is an $8,000 Home Buyer Tax Credit that is being funded by our government. It is for 1st time buyers or someone that has not owned a home for at least 3 years. It does not have to be repayed, that is right--FREE MONEY, as long as you live in the house at least 3 years. It applies to buyers that purchase between January 1, 2009 and December 1, 2009. The maximum amount of the credit is $8,000. The credit is equal to 10% of the purchase price upto $8,000. So, if you recently bought a home for $75,000, you would receive a $7,500 credit. Also, to be eligible, you cannot make more that $75,000 per year if you are single, or $150,000 per year for married couples.

Here are some other questions with answers:

*What is the definition of a first-time home buyer?
Someone who has not owned a home in the last 3 years prior to the purchase. For married people, this also includes your spouse. So, you cannot have a house in the husbands name, then purchase the new house in the wifes name. However, unmarried joint purchasers may allocate the credit amount to a buyer that qualifies. Example, a parent wants to buy a home jointly with their son or daughter, they may allocate that credit towards the son or daughter. A home must be lived in as a primary residence, not a vacation home or rental property.

*How is this different from the last 1st time buyer tax credit?
This one is not an interest free loan like the last one was, and does not have to be paid back. Plus, this credit is for upto $8,000 instead of the $7,500 that was passed last year. if you were to sell though within 3 years of the purchase, you would face a recapture of the credit from the IRS.

*How do I claim the tax credit? Do I need to complete a form or application?
You claim the tax credit on your federal income tax return. You need to complete IRS Form 5405 to determine the tax credit amount, and then claim this amount on line 69 of the 1040 income tax return. There are no other forms or applications or pre-approval necessary.

*I bought my home early this year before the $8,000 credit was passed and I already filed my taxes and received the old credit that has to be repayed. Can I still qualify?
Yes, you will have to file an ameded 2008 tax return with a 1040X form and consult your tax advisor.

*I bought a home in 2008. Do I qualify for this credit?
No. But if you purchases your first home between April 9,2008 and January 1, 2009 you may qualify for the old credit.