Frequently Asked Questions (FAQs) About the $8,000 First-Time Home Buyer Tax Credit

Florida first-time home buyers are in a great position at the moment, thanks to the $8,000 First-Time Home Buyer tax credit.

Should you be thinking about a house purchase between now and Nov thirty, 2009, and you intend to live in your Winter Haven home for three years or more, then you simply must employ this true $8,000 tax allowance. Couple this credit with a minimal 3.5 % FHA mortgage downpayment or a real 100 % financed USDA Agricultural Development – and you seem to have a recipe for some heavy money savings.

To make absolutely sure you understand some of the key parts of this tax allowance, I have pulled together answers to 5 of the most often asked First-time Home Buyer Tax Credit queries I have fielded over the last months.

Who Qualifies for the $8,000 First-Time Home Buyer Tax Credit?

You are eligible to receive this tax credit so long as you adhere to the following:

• You have never owned a home – or, have not owned one in the past 3 years – determined by HUD 1 date when previous home was sold (Note: If married and you did not own a home within the last 3 years, but your spouse did, then you do not qualify)
• You have or will buy your home as a primary residence between January 1 and November 30, 2009
• You can show that if you owned a rental property or vacation home, it was not used as a primary residence over the last 3 years
• If you’re unmarried and you are buying the home with another person who owned a home within last 3 years but you did not, you can “designate” the tax credit to you – qualifying you as the First Time Home Buyer (FTHB)
• If your parents cosign on a mortgage (and own a home) and the you are the FTBH, then they are eligible for the tax credit.
• Non-US Citizens may qualify if they meet resident-alien status (IRS Pub 519)
• Revenue or Housing Bond financing are eligible for tax credits.

What Types of Properties are Eligible for the Tax Credit?

• Primary Residence – Single family, 2-4 units (must occupy one unit) town homes, condos, manufactured homes, mobile homes and houseboats.  Yes, houseboats!
• For new construction – The “Purchase Date” is the date that you begin to occupy the home (between Jan 1 and Nov. 30, 2009) Note: You can have owned land and be in the process of building.

What Income Limits Are Associated with the Tax Credit?

• $75,000 Single Person (Partial Credit up to $95,000)
• $150,000 Married Couple (Partial Credit up to $170,000)
• Totals are based on Adjusted Gross Income (AGI) line on IRS Form 1040, 1040A or 1040EZ

What Exact Amount is Awarded via the Tax Credit?

• You may be eligible to receive a maximum of $8,000, or the amount equal to 10% of home’s sales price – up to this amount. If you buy for $75,000, then you are eligible for only $7,500.
• Up to Maximum of $8000
• Partial Tax Credit if income exceeds $75,000 or $150,000

Does the Tax Credit Have to be Repaid?

• No.  As long as you stay in the home for a minimum of 3 years, you do not have to pay back the tax credit.
• Note: If you sell within 3 years, the entire tax credit needs to be repaid!

Need to make an application for the 1st time Home Buyer Tax Credit? Be certain to download and complete IRS First-Time Home Buyer Credit Form 5405.

As always, you want to talk with your tax pro per how this tax subsidy will impact your finances. Having said that, if you are intending to get a Florida home in the future – or any time up thru Nov thirty, 2009 – taking the $8,000 First Time Home Buyer tax subsidy is a no-brainer!