After weeks of intense negotiation, the new first time home buyer tax credit of $8,000 was signed into law this week. Here are some first time home buyer tax credit FAQs:
Will I qualify for the credit?
You qualify for the full credit if:
- You close on a home between January 1, 2009 and December 1, 2009 AND
- You haven’t owned a home in at least three years AND
- Your adjusted gross income is less than $75,000 (single) or $150,000 (married).
How much is the first time home buyer tax credit worth?
The credit is for 10% of the purchase price of the home, up to a maximum of $8,000.
What if I wouldn’t owe $8,000 in tax?
Not a problem. The first time home buyer credit is refundable, meaning that you get the money even if it exceeds what your tax liability would have otherwise been.
Do I have to pay back this money?
No. You keep the $8,000.
Yes, unless you sell the home within three years.
How is this different from the previous version of the home buyer tax credit?
In several ways. Read more about the 2008 version of the first-time home buyer tax credit and note that it
- Has a maximum value of $7,500.
- Must be paid back over 15 years.
- Is applicable to homes purchased after April 9, 2008 and before July 1, 2009.
The new credit seems better. If I qualify for both, why would choose the old one?
What other questions do you have? Comments? Happy to see this credit because you’re about to buy a home? Ticked off because you bought one in late 2008 or even 2007? Do ask. Do tell.