Q: What is the maximum amount of the new tax credit?

A: The credit is up to $8,000 for first-time homebuyers and $6,500 for current homeowners.  Married couples can only claim one credit.

Q: Who is eligible for the tax credit?

A: First-time home buyers and current homeowners who purchase between November 7, 2009 and April 30, 2010 and close before July 1, 2010.  First-time homebuyers are ineligible if they have owned a home within three years prior to the purchase date.  Current homeowners purchasing a principal residence are also eligible for a credit as long as they are selling or vacating a principal residence used for five consecutive years of the past eight years.

Q:  What type of home is eligible?

A:  The new home must be a principal residence and must be located in the United States.  Generally, a principal residence is where you spend at least 50 percent of your time.  A principal residence can be a single family detached home, condo, co-op or town home.  For new construction, the “purchase date” is the date you occupy the home.

Q: How does the credit work?    

A: The provision allows for a refundable tax credit on the purchase of a home or credit up to 10 percent of the home’s purchase price.  If total tax liability in the given year is less than $8,000, in the case of first-time homebuyers, or $6,500, in the case of current homeowners, then the IRS will refund the balance.

Q: Do I have to pay back the credit?

A: If you occupy the home for at least three years you will not owe on the credit.  If you sell within three years, the full amount of the credit will be recouped on the sale.

Q:  When/how can I claim the credit?

A: Credits can be claimed on the 2009 tax return, amended 2008 or 2009 tax return or 2010 tax return.  Documentation of purchase must accompany return. 

Q:  What are the income limits?

A:  Credits are reduced or eliminated for individuals whose income exceeds $125,000 or joint filers whose income exceeds $225,000.  If income falls within $20,000 of these limits, homebuyers fall into the “phase out” range ($105,000 to $125,000 for individuals and $205,000 to $225,000 for joint filers).  Homebuyers in the “phase out” range will receive a fraction of the total tax credit.

Q: Who cannot take the credit?

A: Purchasers with any of the below circumstances cannot take the credit:

- Those purchasing vacation homes and rental properties.

- Those who buy a house from a close relative, including a spouse, parent, grandparent, child or grandchild.

- Nonresident aliens.

$8,000 First Time Homebuyer Tax Credit



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