All You Need to Know about the First-Time Homebuyer Tax Credit

No need to go to a seminar or be subject to a realtor sales pitch. Here is all you need to know about the First-Time Homebuyer Tax Credit, current as of May 21, 2009.

AMOUNT OF CREDIT: 10% of purchase price, up to a maximum of $8000.00.

DATES OF ELIGIBILITY: Through December 1st, 2009.

FIRST-TIME HOMEBUYER REQUIREMENT: Buyers may NOT have owned a principal residence in the last three years preceding the purchase.

INCOME LIMITS: Full credit available to individuals with an adjusted gross income (AGI) of no more than $75,000.00 ($150,000.00 on joint return). Credit phases out for AGIs up to $20,000 above those caps.

ELIGIBLE PROPERTY TYPES: Any single family residence that will be used as a primary residence, including condos, co-ops and townhouses.

REPAYMENT: None.

RECAPTURE: If the home is sold within three years of purchase, the entire credit is recaptured upon sale.


I have had many inquiries on this topic. The record should now be straight!

Comments

[CM in MA:]

I have one more question. I met the definition of a first time buyer in 2003. After 20 years on active duty in the U.S. military, I put down more than 20% on my home purchase, took out a conventional fixed-rate mortgage, and now pre-pay my principal. My question is: where's my tax credit or loan modification? Oh, and who is paying to provide the $8000 credit? Sorry, that makes two questions.

May 22 08:39 AM

[Birdsnest:]

Q: Do you have to live in the home as your primary residence or can you rent it out?
Q: Could I gift a downpayment and continuing payments to my small child as a means to capture the credit on, say a, $80K home?

May 22 12:29 PM

[rcontact:]

Q. What about duplex family residence used as primary residence? Would this be an eligible property type?

May 22 07:44 PM

[Fighting Yoda:]

1. Type of home: Any home that will be used as a "principal residence" will qualify for the credit. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. So yes you have to live in the home.

2. Don't know, don't think so.

On May 22 08:39 AM CM in MA wrote:

> I have one more question. I met the definition of a first time buyer
> in 2003. After 20 years on active duty in the U.S. military, I put
> down more than 20% on my home purchase, took out a conventional fixed-rate
> mortgage, and now pre-pay my principal. My question is: where's my
> tax credit or loan modification? Oh, and who is paying to provide
> the $8000 credit? Sorry, that makes two questions.

May 23 03:31 AM

[Fighting Yoda:]

Yes.
Any home that will be used as a "principal residence" will qualify for the credit. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats.


On May 22 07:44 PM rcontact wrote:

> Q. What about duplex family residence used as primary residence?
> Would this be an eligible property type?

May 23 03:32 AM

[Fighting Yoda:]

This is only for first time home buyers, not for loan modifications etc.


On May 22 08:39 AM CM in MA wrote:

> I have one more question. I met the definition of a first time buyer
> in 2003. After 20 years on active duty in the U.S. military, I put
> down more than 20% on my home purchase, took out a conventional fixed-rate
> mortgage, and now pre-pay my principal. My question is: where's my
> tax credit or loan modification? Oh, and who is paying to provide
> the $8000 credit? Sorry, that makes two questions.

May 23 03:35 AM

[themackattack:]

I would probably go ahead and buy a house if it weren't for the income cap limits. Seems like a silly thing to put a cap on if you are trying to incentivize people to take the leap and a risk during a declining market.

I thought the purpose was to incentivize with the aim of helping the housing market, not so much just to subsidize lower income people.

Oh well...guess I will just rent for another year until prices are even better.

May 23 08:53 AM

[2houndz:]

Thanks for the short and sweet update.

I have owned many homes over the years, but sold my last house in November 2007. Do I, or will I qualify as first time buyer after a certain period of time of not owning? Thanks.

May 23 11:03 AM

[kotika98:]

> I thought the purpose was to incentivize with the aim of helping the housing market, not so much just to subsidize lower income people.

The purpose is to get more votes in 2012.

May 24 10:44 AM

[Linh:]

Yes you are considered a first time home buyer if you have not owned in the last THREE years.

Ref: IRS website


On May 23 11:03 AM 2houndz wrote:

> Thanks for the short and sweet update.
>
> I have owned many homes over the years, but sold my last house in
> November 2007. Do I, or will I qualify as first time buyer after
> a certain period of time of not owning? Thanks.

Jun 06 11:36 PM

[Linh:]

They will only help you if you are 5% underwater funny huh since most are way under 5%.

For the second question answer is our great great great grandkids of course if they manage to pay all the other debts first.

On May 22 08:39 AM CM in MA wrote:

> I have one more question. I met the definition of a first time buyer
> in 2003. After 20 years on active duty in the U.S. military, I put
> down more than 20% on my home purchase, took out a conventional fixed-rate
> mortgage, and now pre-pay my principal. My question is: where's my
> tax credit or loan modification? Oh, and who is paying to provide
> the $8000 credit? Sorry, that makes two questions.

Jun 06 11:39 PM