With the huge interest in my post on $8,000 Credit for Home Buyer in New Stimulus Plan, I thought it would be good to layout what exactly IS the new $8,000 Home Buyer's Tax Credit.  Below is a brief list of some things that you need to know about the tax credit.

First-Time Home Buyers ONLY

The new tax credit, similar to the previous one, is for 1st time home buyers only purchasing a primary residence.  The tax credit is 10% of the home purchase up to the full $8,000.  Unlike the previous $7,500 tax 'credit' this one is a true credit and does not have to be repaid.

The definition of "1st time Home Buyer" for the purpose of qualifying for this tax credit is any person that has not owned a principle residence within the last 3 years prior to purchase.  If you're married, both you and your spouse must meet this requirement.  Unmarried joint purchasers may allot the tax credit to any one of them that qualifies, but not both.  Owning a vacation home or a rental does not disqualify you as a first time home buyer.

Time Limit to Purchase

To qualify, you must purchase a home between January 1st, 2009 and December 1st, 2009.  The definition of purchase as it relates to the credit is the date that the deed is recorded.  If you recently purchased a home prior to this date, you may still qualify for the $7,500 tax credit offered earlier, but this "credit" must be repaid over time.

There are Income Limits

For single purchasers, your adjusted gross income must be less than $75,000 and $150,000 for married purchasers.  If you make more than this, you may still qualify for a portion of the tax credit.  It is phased out completely at $95,000 for single and $170,000 for married.

What Homes Qualify?

All single family type homes qualify.  This includes townhomes, condos, manufactured/modular, house boats and even duplexes, triplexes and quad-plexes (as long as you live in one of the units).  If you have a new home built, you qualify as long as you occupy the home within the dates given.

This is a True Credit

This is a true credit and does not have to be repaid.  It is also fully refundable, which means that if you owed zero taxes for the year, you'd still get an $8,000 check.

There is a Recapture

If you take the credit, you must occupy the home for at least three years in order to be fully vested.  If you sell before that time, you may be required to repay the credit back to the government, though there are exceptions to this rule.

This is posted as general information only.  Please consult with your Tax Professional or Legal Counsel, if needed, to fully determine if you qualify or not.  Thanks

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