First-Time Home Buyer Tax Credit

An $8000 first-time home buyer tax credit was signed into law as part of the economic stimulus package.

The credit applies to 10% of the purchase price of a home and is capped at $8000 and unlike the earlier home buyer tax credit, this one does not have to be repaid.

A "first-time home buyer" for these purposes is defined as someone who has not owned a principal residence for three years before buying a house.

This tax credit applies only to 2009 buyers, that is, those who purchase a home after January 1st up to December 1st of 2009.

There are income limitations. Single buyers need a modified adjusted gross income of $75,000 ($150,000 for married couples) or less to qualify for the full credit. If you earn more, you may qualify for reduced credits.

Because this credit is "refundable," you may use it even if you don't have much tax liability.

You must own the home for at least three years. If the home is sold before then, you will have to return the credit to the government.

I hope this information has been of value to you.