$ 8000 Refundable Tax Credit for First Time Homebuyers

President Obama just signed the economic stimulus package in Denver, CO which includes a gift for first time homebuyers– $8,000 (or 10% of the home’s value, whichever is less) on their 2008 or 2009 taxes.

Below are some of the details of the program

Key Information

Following are key points that prospective home buyers should be aware of when considering a home purchase under the tax credit program.

• A tax credit of up to $8,000 is available for first-time home buyers purchasing on or after January 1, 2009 and on or before April 30, 2010. In cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.
• A tax credit of up to $6,500 is available for repeat home buyers who have owned a home for five consecutive years out of the prior eight years. The repeat home buyer tax credit applies to houses sold after November 6, 2009 and on or before April 30, 2010. In cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.
• Income limits of $125,000 for individuals and $225,000 for married couples filing jointly apply to all sales occurring after Nov. 6, 2009.
• The income limits for sales occurring on or after January 1, 2009 and on or before November 6, 2009 are $75,000 for individual taxpayers and $150,000 for married couples filing jointly.
• Homes priced above $800,000 are not eligible for either the first-time home buyer tax credit or the repeat home buyer tax credit.
• Expanded tax credit benefits apply to members of the military, the foreign service and the intelligence community.
• Home purchases in 2010 may be claimed on an amended 2009 income tax return.
• Persons who are claimed as dependents by a taxpayer or who are under age 18 do not qualify for a tax credit.
• Home purchases from relatives of the taxpayer or the taxpayer’s spouse do not qualify for the tax credit. The IRS defines relatives as ancestors (parent, grandparent, etc.), lineal descendants (child, grandchildren, etc.) and spouses.
• Married couples are not eligible to claim the first-time home buyer tax credit if either spouse has previously owned a home. They may, however, qualify for the repeat home buyer tax credit.
• Neither the first-time home buyer tax credit nor the repeat home buyer tax credit have to be repaid unless the home is sold or ceases to be used as the buyer’s principal residence within three years after the initial purchase.
• Taxpayers must submit a copy of the HUD-1 settlement statement and IRS Form 5405 to claim either the first-time home buyer tax credit or the repeat home buyer tax credit.

 

• Refundable: The credit is refundable, meaning tax filers see a refund of the full $8,000 even if their total tax bill - the amount of withholding they paid during the year- was less than that amount.

• Purchase Date: To qualify for the credit, the purchase must be made between Jan. 1, 2009 and Nov. 30, 2009. Buyers may not have owned a primary home (lived in it) for the past three years to qualify as “first time” buyer. They must also live in the house as their primary residence  for at least three years, or they will be obligated to pay back the credit.

• Paperwork: Applying for the credit will be easy - or at least as easy as doing your income taxes. Just claim it on your return. No other forms or papers have to be filed. Taxpayers who have already completed their returns can file amended returns for 2008 to claim the credit.

• Income Restrictions: To qualify, buyers must make less than $75,000 for singles or $150,000 for couples. (Higher-income buyers may receive a partial credit.)

Have questions about the $8,000 tax credit? Go to the forum advise section of Zillow

Update (11/10/09): The $8000 tax credit for first-time homebuyers was extended through April 30, 2010 and more people are included, including a $6500 tax credit offered to homebuyers who have lived in their current residence at least five years and who want to “trade up” (buy a new primary residence).

Details on Tax Credit Extension:

• $8000 tax credit for first-time homebuyers extended for buyers who sign a contract by April 30, 2010 (and who close by the end of June).
• $6500 tax credit offered to homebuyers who have lived in their current residence at least five years and who want to “trade up” (buy a new primary residence).
• Couples earning as much as $225,000 a year and individuals earning up to $125,000 would qualify (up from $75,000 for individuals and $150,000 for couples).
• Tax credit not applicable for those buying homes worth more than $800,000.
• Those who sell their new home or stop using it as their main residence within three years would have to repay the credit.

 

 

Do you qualify for the $8,000 First-Time Home Buyer Tax Credit?

Answer these questions to see if you qualify for the $8,000 first-time home buyer tax credit.