The Basics: 2009 First-Time Home Buyer Tax Credit

As part of its plan to stimulate the
U.S. housing market and address
the economic challenges facing our
nation, Congress has passed legislation
that grants a tax credit of up
to $8,000 to first-time home buyers.
WHO QUALIFIES?
First-time home buyers who purchase
homes between January 1,
2009 and December 1, 2009.
To qualify as a Gfirst-time home
buyerH the purchaser or his/her
spouse may not have owned a
residence during the three years
prior to the purchase.
WHICH PROPERTIES ARE ELIGIBLE?
The 2009 First-Time Home Buyer
Tax Credit may be applied to primary
residences, including: singlefamily
homes, condos, townhomes,
and co-ops.
HOW MUCH WILL THE CREDIT BE?
The maximum allowable credit for
home buyers is $8,000. Each home
buyerIs tax credit is determined by
two factors:
The price of the homeJthe credit is
equal to 10% of the purchase price
of the home, up to $8,000.
The buyer's incomeJsingle buyers
with incomes up to $75,000 and
married couples with incomes up to
$150,000Jmay receive the maximum
tax credit.
IF THE BUYER(S)' INCOME EXCEEDS
THESE LIMITS, CAN HE/SHE STILL GET
A CREDIT?
Yes, some buyers may still be eligible
for the credit.
The credit decreases for buyers
who earn between $75,000 and
$95,000 for single buyers and between
$150,000 and $170,000 for
home buyers filing jointly. The
amount of the tax credit decreases
as his/her income approaches the
maximum limit. Home buyers earning
more than the maximum qualifying
incomeJover $95,000 for singles
and over $170,000 for couples
are not eligible for the credit.
WILL THE TAX CREDIT NEED TO BE
REPAID?
No. The buyer does not need to
repay the tax credit, if he/she occupies
the home for three years or
more. However, if the property is
sold during the three-year period,
the credit will be recouped on the
sale.
TAX CREDIT CAN BE USED ON CLOSING
COSTS
FHA-approved lenders received the
go-ahead to develop bridge-loan
products that enable first-time buyers
to use the benefits of the federal
tax credit upfront, according to
eagerly awaited guidance from the
U.S. Department of Housing and
Urban Development on so-called
home buyer tax credit loans that
was released today.
Under the guidance, FHA-approved
lenders can develop bridge loans
that home buyers can use to help
cover their closing costs, buy down
their interest rate, or put down more
than the minimum 3.5 percent.
The loans can't be used to cover
the minimum 3.5 percent, senior
HUD officials told reporters on a
conference call Friday morning.