Tips For Eligibility To Get $8000 As First-Time Homebuyer

Wednesday, April 29, 2009, PM | Leave Comment

There is a nice windfall for some home buyers in the economic stimulus bill signed into law first week of April by President Obama. First-time buyers can claim a credit worth $8,000 – or 10% of the home’s value, whichever is less – on their 2008 or 2009 taxes. This is refundable tax credit, not a deduction.

  • If you owe IRS less than $8,000, you get the difference.
  • If you owe IRS more than $8,000, you pay the difference.
  • If IRS owes you, you get $8,000 plus what IRS owes you.

Who is eligible to claim the tax credit?

  • The home purchase must occur between January 1, 2009 and November 30, 2009 – both dates inclusive. For the purposes of the tax credit, closing and the title to the property transfers to the home owner must occur between these dates.
  • The very first-time ever buyer. No recorded history of ever buying a home before – brand new or older home.
  • Also, the law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the home ownership history of both the home buyer and the spouse.
  • For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit.
  • However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter.
  • Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.

How is the amount of the tax credit determined?
The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.

There is always an income limit – what is it?

  • 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 progressively reduced for buyers with a modified Adjusted Gross Income (AGI) 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.
  • This simply means that the tax credit amount becomes $0 with Adjusted Gross Income (AGI) of more than $95,000 for single taxpayers and $170,000 for married taxpayers filing a joint return.

In a Nutshell
It is not a tax-deduction. It is a tax credit.

Throw us a like at

Post a Comment on Content of the Article


This is not a billboard for your advertisement. Make comments on the content else your comments would be deleted promptly.

CommentLuv badge




Blog Top Sites Blog Top List Blog Top List
On Top List Blog Log Blogs Avenue