The $8,000 (or 10% of the purchase price) tax credit for first time home buyers in 2009 is actually a tax refund... See the full article from CNN Money here.
More details from our friend, Terry Berding at Wells Fargo:
Here are some of the basic provisions in the bill pertaining to the tax credit for first time home buyers:
- The tax credit is available only for first-time home buyers. The IRS definition of a "first-time home buyer" is a buyer who has not owned a principal residence during the three-year period prior to the purchase.
- There is a $75,000 Adjusted Gross Income (AGI) limit for an individual and a $150,000 limit for joint filers. Higher incomes may receive partial credit up to AGI of $170,000 for joint and $95,000 for individual returns.
- Up to $8,000 tax credit is available only for primary residence purchases. The credit is 10% of the purchase price of the home. Example: a $70,000 purchase price will receive a $7,000 credit. A $100,000 purchase price is capped out @ the $8,000 limit.
- The tax credit does not require a repayment in most cases. The tax credit does have a repayment provision if the homeowner does not occupy the property for a minimum of 3 years from the closing date.
- The home buyer must purchase a home between January 1, 2009 and December 1, 2009.
- The $8000 tax credit is received when the tax return is filed. If only $6,000 in taxes is owed, then a refund of $2,000 will be sent to the individual.
- The credit is claimed using IRS Form 5405
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