Michael on February 18th, 2009
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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?

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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724 Comments to “First Time Home Buyer Tax Credit – 2009 Version”

  1. Michael says:

    @Kathy: So glad you were able to get what you deserve. I can only imagine how frustrating it must be, especially as a paying client to have to spend the time to teach someone how to do their job. Congratulations for sticking with it!

    @Kara: Clever idea, but I’m fairly certain that won’t work. If you bought the home before you got married that would have worked (even though you’ll file a married return in 2009), but because you are to be married at the time of purchase, hubby’s previous ownership interest should exclude you.

    @Carmen: I see this as a possibility, given that your sister isn’t considered a related party for purposes of excluding the transaction. You’d need to be very careful how you went through the process, documenting exactly what you were buying and from whom. Furthermore, you shouldn’t be surprised if this proposed transaction brings forth a closer than typical examination from the IRS (not a reason to avoid the concept, but a fair warning to consider involving a CPA). Good luck!

  2. Nicole says:

    My husband now, boyfriend then, bought a house in 06. I am not on it. We just got married this year and he may have to forclose on his house. If so 1) will I qualify for the credit since I have not owned and he purchased before we were married? 2) if not, then will I be able to buy without him since his credit will be bad?
    Thank you

  3. Michael says:

    @Nicole: You won’t qualify for a credit because your husband has owned a home within the last three years. Unfortunately, all the other facts are not relevant to that determination. Sorry, but I am just the messenger.

    You may very well be able to buy a house without him, you just wouldn’t be able to qualify for this credit.

  4. Nicole says:

    Thank you Michael for the clarification and for helping us through this site!

  5. DanHoff says:

    Hi Michael,

    Excellent job answering all the questions in this blog. You’ve probably been posed this one before but I didn’t see it listed. Here’s the situation:

    I was just married Nov 1, 2008. My wife has owned her home for 5 years. I have no interest in her property nor have I ever owned a home before, so if I were single I would qualify.

    I realize being married to a homeowner kills my chances.

    However, I’m curious if a speedy divorce to save around $8K is worth considering and if we could get away with it.

    If so, my other question would be regarding my amount of credit. My income will probably finalize around $84,000. From my best understanding I would get approximately $4500 credit since I’m phased out. Does that estimate seem about correct?

    Let me know what you think and thank you for taking the time to answer all these fun questions. I’m in the car business and with the CARS (Cash For Clunkers) program I’ve been in the same hot seat answering all kind of questions. Good luck!

  6. Nicole says:

    one more question. If my husband does forclose on his house, am I able to buy it without his name even if we are married?

  7. Michael says:

    @Nicole: You’re welcome. As to your subsequent question and assuming you’re referring to your ability to take the credit, one could take the position you’re not buying a home. You’re just changing the title of a home you were already living in. I don’t believe your exact circumstance has been addressed in the law, but I am skeptical. If you’re not talking about the credit, I don’t know – you’d have to talk to a foreclosure expert, which I am not. Good luck!

    @DanHoff: In general, the IRS isn’t a big fan of people changing their marital statuses solely for tax purposes. What you do from here on is your call. By the way, if you’ve been living in the home your wife owns since you were married, even a divorce won;t help you as you’re now considered as having owned a home now – even if your name isn’t on the deed or mortgage.

    A single individual earning $84,000 would receive a credit in the ballpark of what you calculated.

  8. Christy says:

    Hello Michael,
    I just stumbled upon this blog and have learned so much — thank you for creating and maintaining it! We would appreciate your input on our scenario:

    We just got married last month. Husband lives in the state of XX for school, and will be there for at least 3 years. So we are looking into buying a home there and are doing some homework to figure out if this $8000 rebate could apply to us.

    We both meet the criteria: Each has never owned a home, and each makes less than $75K MAGI. However, I live in the state of YY for work reasons.

    Based on what I’ve read so far, it sounds like the only way for us to get the full $8000 is to close on a home before Dec 1 2009 and have husband file an amended 2008 return (under single status) – and only he will claim this $8000. I should not, because that home in the state of XX will not be my primary residence (but rather, secondary).

    We plan to have the home and loan in both our names, and both of us will be contributing to all payments. Payments will be shared based on % of income – this would not matter in terms of my husband claiming the $8000, correct? For the 2009 tax return, would it be better for us to file a joint return or separate returns? Would this be considered investment property for me?

    Thank you very much for your advice!

  9. Michael says:

    @Christy: Thank you for the kind words. This particular post certainly has taken on a life of its own!

    As to your situation, I think you may be overcomplicating things (a rarity when it comes to the first time home buyer tax credit where things are often more complex than they first appear.)

    Assuming your respective 2008 incomes are similar to your 2009 incomes, you qualify for both years. Furthermore, since the MAGI limits for married couples are twice that of single individuals, you qualify as a married couple as well (which is a good thing, because you can’t do this as a single individual once you are married.)

    Yes, you must purchase a home before 12/1/09 (unless Congress changes the date.) However, either one of you can buy a home and both of your names can be on it, so long as one of you is using it as a primary residence. Therefore, it can be in either state XX or YY, so long as the person who lives in the home is on the deed. (The other person can be on the deed too, on or off the mortgage – that won’t matter). Good luck!

  10. dre says:

    can i qualify for a first time home loan if im renting an apartment

  11. Mike says:

    If my brother has to co-sign on my loan and the lender requires he is also on title and he has owned and sold a home in the last 2 years, will i get my first time buyers rebate ????
    He will not be occupying the home.

  12. Michael says:

    @dre: Few people buy their first homes without a loan. Your ability to get a loan will depend on your credit score, income, and assets. That you are currently renting will not exclude you, though you must buy a home to get a home loan of course.

    @Mike: Mike, as long as you are on the title, live in the home, and otherwise meet the criteria necessary for the credit, simply having your brother participate in the way you describe will not cause you to be disqualified from the credit. You can allocate it it anyway so that your brother doesn’t get any of the credit. In other words, you allocate the full credit to you and none to your brother.

  13. Chris says:

    If I purchase my wife’s grandmothers house in my own name, would this still be considered a close relative and exempt me from the tax credit? By law my wife will be on the tile and we file our taxes jointly. Thank you in advance for your reply.

  14. Michael says:

    @Chris: Neither you nor your wife can qualify for the first time home buyer tax credit if the home purchased is your wife’s grandmother’s.

  15. Drew says:

    Hi Michael,

    I’m in a similar situation as Brandon, and would like your advice.

    Here’s my scenario:

    • As a first-time homebuyer, I bought a new house May, 2009
    • The loan and title are both in my name.
    • I am getting married in Sept. 2009 (she has never owned a home)
    • I will make more than the $95k this year but my future wife and I make less than $150k combined
    • When we get married in Sept 09, I will be adding her to the title.
    • We will be filing our 2009 taxes together married filing jointly

    1. Are we eligible for the $8000 tax credit?
    2. If not, is there anything I can do between now and then so that we are eligible to claim the tax credit.

    Thank you in advance,

  16. Michael says:

    @Drew: This is straightforward. You qualify based on your combined 2009 income. That your soon to be wife wasn’t on the title at the time of purchase is not relevant because you were and you live there. BTW, if your 2008 income was less than $75K, then you can amend and get your money sooner. If not, then your plan to file jointly for 2009 works, you’ll just have to wait a bit to get the money.

    Oh, and congratulations!

  17. Drew says:

    Thanks Michael,

    Just to confirm, It doesn’t matter that my fiance is not on anything related to the home purchase (including the mortgage).

    Thanks again,

  18. Michael says:

    @Drew: Correct.

  19. Dan says:

    Hi Michael,

    I signed a (1) year lease/purchase in September of 2007, with intentions of closing in September of 2008. My plan was to improve my credit rating during the lease to qualify for a better interest rate. However, that happened quicker than I expected so I was able to close early, in February 2009. Of course, had I known about the $7500 credit I would have waited two additional months. Is there anything I can do or did I screw myself out of the tax credit?



  20. Michael says:

    @Dan: hello. Assuming you closed in February 2008 (not 2009), you won’t qualify and there’s nothing you can do. Furthermore, you didn’t screw yourself out of the tax credit since you could not have known the credit was going to become available two months later (unless you’re in Congress but in that case you would have figured something out that was better anyway.)

  21. Daisy says:

    Ok so I\’ve been going through this site trying to find something that may help my current situation. My parents, brother and I are looking to buy a family home that my parents can move into in two years when they retire. They plan on selling the home they currently own at that time. The family would like only my name to be on it (and not my brother\’s) because I seem to have the best credit but the entire family will be helping me out with paying the mortgage. Solely, I do not qualify for a loan to cover the house we\’re looking at because of my income. With a co-signer with the same credit as me, it seems I will. Only problem is my father doesn\’t want his name on anything to do with the house because he hears he would ruin my benefits for being a first time home buyer. Will they take the fact that he owns a house into account if I\’m primary and he\’s co-signing?

  22. Mark says:

    Hi, thanks for your generous answers! Here’s our question:

    We have rented an apartment for quite some time and are planning on closing on a new home soon. We meet all the requirements for the $8000 credit, except we are not quite sure that this new home qualifies as our “Primary residence.” We will keep the apartment and live in the new home as much as possible – but we can’t guarantee that it will be at least 183 days a year. What would happen that might result in the return of the credit? Do we need to submit any evidence that we are living there? Train ticket receipts? Car mileage logs? etc. THANKS!

  23. Christy says:

    Hello again Michael,
    Christy here from the Aug 19 post. Could you explain what you mean by this?
    “…because you can’t do this as a single individual once you are married.”

    We are trying to see it makes more sense to amend the 2008 tax return, or just take the credit for the 2009 tax year.

    Yes, our respective incomes in 2008 are about the same as for 2009.

    Thank you again!

  24. Marla says:

    Hi Michael,

    Great post — thank you! My husband and I are U.S. citizens who were living out of the U.S. until recently. We owned a home abroad, which we sold in July 2009, but obviously never claimed the interest payments on our U.S. taxes. We are now looking to buy a house in the U.S. and a mortgage broker has told me that we will qualify for the $8,000 tax credit since we have not previously owned a home in the U.S. Is this correct? Thanks in advance!

  25. Ashley says:

    My husband and I purchased a home from my step-father and mother without knowing of the relative exclusion! However, since a stepparent is not considered a close relative, could we still qualify for the tax credit even though my mother\’s name was also on the deed? Thanks for your time!

  26. Wendy says:

    Hi Michael,

    My fiance and I bought our first house in May 2009, so the house is under both of our names. We are trying to file an amendment for our 2008 return. We are not married yet. Both of our individual adjusted gross income is more than $75000, but is still well under the cap, so we should be able to get partial credit. Right now, I’m paying for all the mortgage even though it’s under both of our names. Would I bale able to claim the whole credit under my name, as long as my fiance gives consent? Thanks in advance!

  27. Laura says:

    I have just recently come into some money because of my dad’s death, which is unfortunate and am a full-time student at a community college, which my family is paying for. I have a boyfriend who has 40 hours of work a day at minimum wage and thinks that he would need more hours hence another nighttime job to afford an apartment or condo. I have several questions for you: my first is what is the percentage of people that get out of renting and own property, which would be the more practical solution renting or owning a condo, my last question is how would the eight thousand dollar tax credit help this situtuation and in how much ammount of time, by april of next year? december? January? when? Thank You

  28. Michael says:

    @Daisy: That other family members will be on the deed and/or mortgage won’t be a problem or exclude you from qualifying for the first home buyer tax credit. However, you must live in the home for at least three years or you will forfeit the credit. So if you plan to move our for your parents in two years, you’ll have a problem (the need to repay) at that point.

    @Mark: No evidence (other than your closing statement) is required to be submitted to claim the credit. BTW, IRS definition of Main home:

    “You can have only one main home at any one time. This is the home where you ordinarily live most of the time.”

    If it’s not your main home, you would be subject to the repayment provisions. As I am sure you’d expect, I can’t speculate on how/why the IRS will know what or when.

    @Christy: Married individuals cannot file returns as though they were single. You can amend either one or both of your 2008 tax returns and claim a total of $8,000 credit and get it in several weeks. Or, you can wait until next spring and file one married return claiming a credit of $8,000. Same dollar value, but if you amend 2008, you get it faster, so that’s the way to lean.

    @Marla: Woo-hoo! Someone double-checking a mortgage broker’s advice regarding this credit who is right! From the IRS web site:

    Q. Would I be considered a first time homebuyer if I owned a principal residence outside of the United States within the previous three years?

    A. Yes. A taxpayer who owned a principal residence outside of the United States within the last three years is not disqualified from taking the credit for a purchase within the United States.

    @Ashley: You purchased a home from your mother, who is a related party, so the purchase is excluded from the credit. Sorry.

    @Wendy: Yes, but given that your both partially excluded, it will make sense to run the numbers as it may be more beneficial for one spouse to claim more of the credit than the other (ie., the one with the lower income).

    @Laura: Lots of questions here, some of which aren’t really topical for this blog post. As to the first time home buyer tax credit, you can amend your 2008 tax return to claim up to 10% of the purchase price (capped at $8,000 credit) and receive it within several weeks of filing the return. You must purchase the home by the end of November, however. As to whether to rent or buy, there’s nothing inherently correct or incorrect, in my opinion, of doing either. For me, it starts to make sense to buy when you can afford to put down 20% of the purchase price, manage the monthly mortgage payment, and anticipate staying in the residence for at least five and ideally at least seven years. That said, if you ask 10 people that question, you may get 10 different answers. Good luck!

    Thanks to all for the kind words and questions!

  29. Bob Newman says:

    I think this is such a wonderful website and that you for having it. My question, I guess is just a clarification. We are planning on buying a home either rent to own or owner financing. Would either of these qualify for the $8,000 credit, considering that there is no way that I can pay them off and get title before the deadline. Again, thank you so much for the website and the help.

  30. Michael says:

    @Bob Newman: Thanks for your kind words. You must close by 11/30/. As I understand it, closing includes the taking of title (along with the bank if you have a mortgage). If you won’t get your name on the title by 11/30, you won’t qualify. You don’t have to have the home fully paid off by 11/30 (you can still owe money on a traditional mortgage, for example).

  31. amber says:

    We have a trailer that we bought for $500, there is no title all we have is a paper showing that we bought it for $500. We are now buying a new home, do we qualify as first time home buyers? Also, what if someone owns a trailer that was given to them, would they qualify?

  32. amber says:

    i just want to add something to my previous post from Aug 31st, 2009 at 8:52 pm. my uncle is buying a new trailer but he is paying cash for it does he qualify

  33. Michael says:

    @amber: Technically a trailer home is a home, so if you own one, you’re not a first time home buyer for purposes of this credit. That said, it seems counter-intuitive. If I were in your shoes, I would contact the IRS directly and find out what they say. If you do so, I (and countless others) would certainly appreciate your putting their response here. Thanks and good luck!

  34. Jimmy says:

    I’m closing on a house on Sept 30th 2009. I’m getting married to a non-resident on Sept 26th 2009. Would I be able to file an amendment for the 2008 tax year because I claimed single? Or would I not qualify?

  35. Michael says:

    @Jimmy: I believe you’ll be fine as the prohibition is that a non-resident alien can’t claim the credit. (You’re not a non-resident alien). If you’re prohibited (which, again, I don’t think you are), it wouldn’t matter which year you filed, since you’ll be married at the time of the purchase.

  36. Jimmy says:

    Thanks Michael, but in 2009 we’ll file married filing jointly and since she’s a non resident we won’t be qualified correct?

  37. Michael says:

    @Jimmy: If I’m I right in that YOU still qualify, you’d still be able to file next year as married (even to a NR). Still, I’d strongly recommend you amend 2008 as you’d get your money far earlier and not raise the NR potential issue.

  38. amber says:

    Thanks for your response. So it doesn’t matter if the trailer or home was given to you? What if it was left to you in your parents will and you sell it, will that still disqualify you? Since it wasn’t something that you chose to own.

  39. Michael says:

    @amber: Correct. Ownership is ownership whether or not you bought it. (If you didn’t live in the home, that would be different.) But once you lived in a home you’ve owned, you’re disqualified.

  40. amber says:

    ok thank you so much

  41. Linda says:

    Dear Michael: If I purchased the home in cash and I have not owned a home in the last three years? Does it matter that I purchased the home cash? Do I still qualify for the first time tax credit if I do not have a loan?

  42. Michael says:

    @Linda: You do not need to take out a loan to qualify for the credit.

  43. Bank account says:

    This is really helpful for newlyweds. They can start their family right. If it’s true it will be easier for us to apply for a home loan.But what if two people separated how would the loan goes? Who will continue the loan and who will not?

  44. Michael says:

    @Bank account: Will depend on the negotiations around you divorce. Typically, the person who keeps the house also keeps the mortgage. Support in the form of alimony may or may not be part of the settlement.

  45. Jessica says:

    Michael- This might have already been answered but I couldnt find it. Last February my boyfriend and I bought a house with the help of a down payment from my parents. We filed as joint tenants and split the Tax Credit 50/50 as we both recieved $4,000. As it turns out, the relationship did not work out and he has recently moved out. We filed a quit claim deed removing his name and adding my parents. Since he moved out of the home, does he have responsibilty to pay back the credit? What if I decide to move or sell the house before the three year period…would I be responsible for all of the repayment-$8,000?

  46. Michael says:

    @Jessica: Even after nearly 500 comments, there are still new questions. Yours is one of them.

    To the best of my knowledge, your situation is not specifically addressed by the IRS-provided information. This is what I think should happen. The ex should have to pay back his $4K. You will only have to repay your $4K if you sell the home before the three year mark.

    For those wondering, yes, the answer would have been different had they been married and then divorced.

  47. Tommy B says:

    I was wondering, with the abundance amount of short sales and the increasing amount of time that they take to apporve (90-120 days), if the FTHBTC will be extended into next year or past Dec 1st at all. We are looking at houses now but we don’t want to miss out on the ‘credit if we find a house on a short sale and have to wait so long for an approval.

  48. Hilda says:

    My son is purchasing a coop and needed us to co-borrow it with him because he didn’t qualify for the entire mortgage. He is a first time buyer but we aren’t. Does he still qualify. His name alone will be on the coop stock certificate.

  49. Michael says:

    @Tommy B: Who knows? There have been rumors of that possibility, but that’s all they are: rumors. Congress has been a bit occupied by the health care reform discussions so there hasn’t been much talk about this credit and other tax changes/extensions. In my opinion (emphasis on opinion), there will be some sort of extension of the credit but not until around the time this is set to expire. I’m confident that the current administration does not want to remove stimulus (which is what the expiration of the credit amounts to), when housing prices are just beginning to stabilize and prime mortgages are defaulting at accelerating rates. But I also don’t believe they don’t want to telegraph their intention, otherwise they risk diluting the current “hurry up” before 12/1 incentive that exists today. That’s my opinion, for what it’s worth.

    @Hilda: Yes.

  50. Dan says:


    I co-sign for my sister and brother in law to buy their house. They’re not first time buyer. I am, however, as a co-signer, do I qualify for the credit?


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