$8000 First-Time Home Buyer Tax Credit:
6 things to Know

Eight Grand, new buyers: This credit is equivalent to 10% of the purchase price of the home – although it’s capped at $8,000 and applies only to first-time home buyers and principal residences. But unlike an earlier $7,500 home buyer tax credit, this one does not have to be repaid.

First time buyers defined: For the purpose of this legislation, a “first-time home buyer” is someone who hasn’t owned a principal residence for 3 years before buying a house. (The date of purchase is considered the day that the title is transferred.) That means if you’ve owned a vacation home – but not a principal residence within the past 3 years, you would still qualify for the credit.

2009 buyers only: Only those who purchase a home on or after January 1 and before December 1, 2009 are eligible for the credit. It’s highly recommended that buyers start looking for a new home as soon as possible, as the average escrow takes at least 45+ days to close.

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, that’s $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 don’t have much tax liability.

Recapture: Buyers have to own the home for a least 3 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.)