Six Things to Know about the New $8,000 Tax Credit.
- Up to $8,000 for New Buyers: The credit is equivalent to 10 percent of the purchase price of the home. It is capped at $8,000 and applies only to first-time home buyers and principal residences. Unlike the previous $7,500 incentive, this credit does not have to be repaid.
- First time Buyers defined: For the purpose of this legislation, a “first-time home buyer” is someone who has not owned a principal residence for three years before buying a house. (The date of purchase is considered the day that the title is transferred.) That means if you have owned a vacation home–but not a principal residence–within the past three years, you would still qualify for the credit.
- 2009 Buyers Only: Those who purchase a home on or after January 1 and before December 1, 2009 are eligible for the credit. This credit is not applicable for purchase outside of those dates.
- Income Limits: The Tax Credit is subject to income limitations. Single Buyers need a modified adjusted Gross Income of $75,000 or less to qualify for the full credit, $150,000 for married couples. Those earning more than these thresholds may be eligible for reduced credits.
- Refundable: Because the Tax Credit is “Refundable,” qualified Buyers can take advantage of it even if they do not have much tax liability. For eligible purchase in 2009, you can choose to claim the credit on either your 2008 (or amended 2008 return) or 2009 return. For more information visit: www.irs.gov.
- Recapture: Buyers have to own the home for at least three years in order to capitalize on the credit. If they sell the home before then, they will have to return the credit to the government. (Exceptions will be made in certain cases, such as death or divorce.)