Frequently Asked Questions About the 2009 Tax Credit for First Time Home Buyers
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Who is eligible to claim the tax credit?
You are eligible for the tax credit if you are a first time home buyer. You can purchase either a new or resale home must your purchase (i.e. close of escrow) must take place between Jan. 1 and Dec. 1, 2009.
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Am I a first-time home buyer?
If neither you nor your spouse have not owned a principal residence in the three years immediately prior to the purchase of your new residence, you qualify as a first time homebuyer. If either of you, however, has owned a principal residence during that time, neither of your qualifies as a first time home buyer.
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Does everyone receive $8,000 in tax credit?
No. You will receive a tax credit of 10% of the cost of the home up to a maximum of $8,000.
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Are there any income limits for claiming the tax credit?
Yes. The income limit for single taxpayers is $75,000; the limit is $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The phaseout range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.
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Can buyers with modified gross income above the limit qualify?
Maybe. There are phaseout limits. Buyers with higher income may receive partial tax credits.
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Is the 2009 tax credit different than the 2008 tax credit passed by Congress?
Yes. The 2008 tax credit had to be repaid. This credit does not have to be repaid as long as you live in the home for at least three years.
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How do I claim the tax credit? Do I need to complete a form or application?
You simply claim it on your tax forms for 2009. Ask your accountant or tax specialist for specifics.
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Will my home qualify?
Probably. As long as it’s your principal residence, it will likely qualify. This includes single family homes, mobile homes, condominiums and even houseboats!
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Can I purchase the home from a relative?
No. You cannot purchase the home from a lineal descendant (parents, kids, etc.) and qualify for the tax credit.
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What if I have very low income?
You may actually receive cash back. For instance, if your tax is only $2,500 for the year, you would actually receive a check for $5,500. (Assuming you qualified for the entire credit.)
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How is a tax credit different from a tax deduction?
A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS.
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