Understanding the New $8,000 First-Time Home Buyer Tax Credit

By
Real Estate Agent with Keller Williams Realty Atlanta Partners

Did you know that if you're a first-time home buyer purchasing a house between January 1, 2009 and December 1, 2009 that you can receive a tax credit up to $8,000?

Photo By: Jack Duval

Previously this government incentive to purchase a home was limited to $7,500 and had to be paid back over the course of 15 years. However, some changes have been made, which I will outline here that will hopefully answer all of your questions.

Photo By: Simon Doggett

  1. Who can receive the credit? Only first-time home buyers are eligible and they must close between   January 1, 2009 and December 1, 2009. Investors or people purchasing a second home can not receive this credit.
  2. What is a first-time home buyer? A buyer who has not owned a principal residence in the 3 previous years before buying a home. If you are married taxpayers, NEITHER you nor your spouse can own a primary residence; in other words if one of you owns a home (a primary residence) you can't obtain the tax credit if the other spouse purchases a home.
  3. How is the amount of the tax credit determined? It is limited to 10% of the sales price of the home, but a maximum of $8,000.
  4. What are the income limits on people claiming the tax credit? For single taxpayers the income limit is $75,000 and for married taxpayers filing a joint return it's $150,000. If you want more specific details on this, please visit www.FederalHousingTaxCredit.com or ask your CPA or a tax professional.
  5. How do I claim the tax credit? Simply claim it on your federal income tax return; just fill out IRS Form 5405 to help you know how much to claim and write it on Line 69 of your 1040 income tax return. No other forms are required.

An important difference between this tax credit and the $7,500 credit put into effect July 2008, is that this $8,000 DOES NOT have to be paid back! The only stipulation is that you must live in the home as your principle residence for at least three years, if you don't you will have to pay back the credit.

Also, because this tax credit is refundable, you could potentially receive a check from the government for part or all of the $8,000. To help you understand this a little better, here's an example from the Federal Housing Tax Credit's website:

"For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed)."

Photo By: Visit Hillsborough

So, first-time home buyers, with this excellent tax incentive, coupled with the low interest rates and the extensive amount of homes on the market, why wouldn't you buy a home this year?

If you still have further questions, please watch the video below provided by the National Association of Home Builders.

(Please note, the content from this post was obtained from the Federal Housing Tax Credit's website.)

If you are in the market to buy or sell your home in the Bethlehem or Dacula area, I would be happy to assist you! My passion is helping people find their dream home and stepping them through this exciting journey. I serve the Walton, Barrow and Gwinnett county areas. Call or text me today!

 

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Yvette & Dennis Gardner 03/18/2009 10:03 PM
Topic:
Home Buying
Location:
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Show All Comments
Rainmaker
478,575
Ken Tracy
Charles Rutenberg Realty - Naperville - Naperville, IL
Naperville Illinois Real Estate

Hi Anne.  Nice informative post.

I probably don't do enough of those...

Ken

March 18, 2009 02:44 PM #1
Rainmaker
605,209
Teri Eckholm
REMAX Specialists - White Bear Lake, MN
Acreage & Lakeshore REALTOR Minneapolis St Paul

Anne--I am so glad you pointed out that a first time homebuyer is anyone who has not owned a home in the past 3 years. Some people don't realize that. Good information for people in the Bethlehem GA area!

March 18, 2009 04:15 PM #2
Rainmaker
955,716
Greg Nino
RE/MAX Compass, formerly RE/MAX WHP - Houston, TX
Houston, Texas

Cant' remind the public ENOUGH!

March 18, 2009 04:35 PM #3
Anonymous
Anonymous
Lynn

Nice blog and good information Anne! Thanks.

March 18, 2009 08:59 PM #4
Rainer
81,231
David Width Jr.
Coldwell Banker Red Top Realty - Little Egg Harbor, NJ

Very good post with a clear explanation Anne. Good job.

March 19, 2009 02:33 PM #5
Rainer
1,622
Elaine Grandolfi
Weichert Realtors Dunhill Group - South Yarmouth, MA

Yes, I do know it.  The IRS web site has a easy to understand one page summary between the 2008 and the 2009 that I am using when I target my first time home buyers and my renters.  Good info.  thanks.

March 20, 2009 05:09 PM #6
Rainmaker
88,744
Casey Joiner
Scenic Sotheby's International Realty www.caseyjoiner.com - Destin, FL
Scenic Sotheby's International Realty

Nice explanation.....it's amazing the interpretations that consumers have right now of this bill.  Have to ground them a bit bc they think it's a free for all.

 

Thanks for the post

March 23, 2009 02:24 PM #7
Anonymous
Anonymous
robin and steve cross

my husband  and  i  are  trying very hard  to  understand  this  $8,000.00 tax credit .  we  know  we  need  to purchase  the  home and  ask for a  ammendment....our  question is  do we  get  this as   cash  or is it  just credit?

March 25, 2009 08:35 PM #8
Rainmaker
129,083
Steve Mattison
Keller Williams Tri-Lakes Realty of Branson - Branson, MO
Ozarksagent Steve Mattison - ABR, e-Pro - Branson

You blog like a Pro, where did you learn all these skills?  I have been trying for over a year to get it together and you make it look so easy, the true sign of a Professional, great job!!!

April 08, 2009 09:53 PM #9
Rainmaker
807,358
Anthony Stokes-Pereira
Better Homes and Gardens Rand Realty - Nanuet, NY
Realtor

Hi Anne;

Great informative post, thank you for sharing.

April 21, 2009 07:14 AM #10
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