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.
Really?
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?
You wouldn’t.
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.
Update: Here are your first time home buyer tax credit options if you buy a home after April 15, 2009.
Second update: Here are the new rules for those who buy their homes after November 6, 2009.
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Yes sir, We own the home together. She lives in the in-law apartment.
I can only hope that it doesn’t ruin my chances of receiving the $8,000.
Also, form 5405 asks “did you receive your home from a relative?” , I should put no? How are they going to know that this person is my brother?
OH and…
I am married (not to my mother,of course! Lol) – We bought the home in April of 2009 & I got married in september of 2009. I am filing married jointly. His name is not on the mortgage/deed. Do you think that would effect whether I get the $8,000?
@Nicole: Look at page two of the instructions to Form 5405 and you’ll see the definition of a relative for the purposes of this credit. Since you weren’t married at the time you bought the house, your husband’s doesn’t matter (again, for purposes of the credit only). He matters otherwise – at least for the first few years of marriage
This is very unfair. I bought my first house in June 5, 2009. The income eligibility was raised but only applicable to houses purchased after November 6, 2009. Is there a way with this?
@Olivia: While those who have benefitted from the quirky and ever-changing rules might beg to differ, I understand where you’re coming from. Just remember, I’m only the messenger.
I have a question regarding the first time homebuyer credit.
If my in-laws give my husband and I land this year (no home is on the property) providing us with a deed to the real estate and my husband and I then purchase a modular or double wide and permanently affix it to that land are we able to claim the first time homebuyer credit on the modular/double wide assuming we meet the income requirements and the other requirements for claiming the credit?
If so, does the home have to be permanently affixed to the land prior to the June 30, 2010 deadline?
Thank you in advance for your assistance with this question.
@RL: I would think so, but that’s a specific-enough question that warrants a call to the IRS to be certain.
hello, i have a few questions regarding the tax credit. 1. would i qualify if i use a co-signer to purchase home? 2. i know there is a maximum amount of money you can earn to qualify but is there a minimum? 3. if the home i purchase is only $55,000 if im correct i will i only get back $5,500 right?
@leonard: 1) no problem 2) no minimum 3) yes, 10% of purchase price is one maximum (the other is $8,000 or $6,500 depending onn whether it’s a first timer or not).
Hi,
My sister and I are buying a house together. Both of us are first time home owner and both of us will be on the deed and loan. She’s claiming the 8k credit on her tax return. My question is if for any reason I need to moved to another state before the 3 years period and my sister will continue living in the house. Do we need to pay back the tax credit in full or part of it? How about if my name is not on the deed but on the loan? Thank you.
@Ann: I’d say that because your sister is claiming the credit on her return and staying in the house for at least three years, she shouldn’t need to return the credit just because you (might) move out.
Thanks Michael for you quick response.
What if I am the one who claims the 8K, then move to another state before the 3 years period? But my sister as a joint owner will still be using the house as her principle residence. I will still pay for my share of the mortgage and is not selling the house or converting it into a rental property. I was thinking to add my parents on the deed as well, and they will be living in the house. Please let me know.
@Ann: In that case, I’d say you’d have to pay back the credit – you’re the one who took the credit and, in your hypothetical case, you meet the criteria for a payback requirement. That you continue to pay for it is irrelevant since it won’t be your principal residence.
thank you michael for answering my other questions. well i have another. can i use the the credit towards the purchase of a home i would buy outright?
@leonard: You’re welcome. Although you have to buy the home first before requesting the credit, you do not have to take a mortgage on that home.
My mother lived in the same home owned by my parents for 41 years. My father passed away, she sold the house and moved in with me while house-hunting. She found a foreclosed home and passed papers in January 2009 and remained living with me while the house was redone. She started sleeping there off and on as work required, and hot the occupancy permit by June.
Does she qualify for anything?
She may qualify for the the $6,500 existing home buyer tax credit. Check it out.
I bought a house this year by myself but am married. Neither of us has owned a home previously. He is not on the mortgage or deed. We are filing married and separate. Since I have sole ownership do I qualify for the $8k?
My husband and I are co-buying a duplex with my sister. My sister does not qualify for the first time homebuyers credit but my husband and I do. Can we claim the full 8k credit since my sister can’t claim any of it?
We will be occupying the duplex, not using it as an income property.
@Jan: Yes.
@Kim: No, you’ll qualify for half, or up to $4,000.
Hello, I have a question for the first time home buying credit as well. It states you can NOT buy from a relative….what exactly does relative mean….does a step parent count? I read on a few website that u can buy from a step parent and its not considered a “close relative”… is this true?
Thanks
@Jaclyn: Yes. The definition of a close relative does not include a step-parent. Note that if your step-parent is married to your blood-parent, that workaround doesn’t apply.
I am married, and I purchased a house by myself. My husband’s name is not on the deed or mortgage. we file tax return as married file jointly. will I get the full 8000 credit if I meet all the other criteria?
one more condition. My husband and I are all first time buyer and our family income meet the limitation requirement.
@justforchild: Yes.
I purchased a house from the estate of my mother, we had an appraisal and paid full market value. Do I qualify for the credit?
@brett: Possibly. Haven’t personally dealt with that one yet. Suggest contacting the IRS. Good luck!