A new stimulus bill has been passed that will give up to $8,000 tax credit to first-time home buyers. Here are six things you need to know about this newly-enacted stimulus bill:
1. Credit up to $8,000: The tax credit is equal to 10 percent of the purchase price of the home, with a maximum of $8,000. This credit is only available to first-time home buyers- buying a principal resident. But unlike the 2008 tax credit, this one does not require repayment. (Click here to view a document with the differences between the 2008 and 2009 first time home buyers tax credits.)
2. Definition of a "first time home buyer": A first time home buyer is defined as someone who hasn't owned a principal residence for three years before buying a house. The date of purchase is considered the day that the title is transferred. So, if you owned a vacation home, but did not use it as your primary resident, you would still qualify for the credit.
3. Buying in 2009 only: A home buyer will only qualify for the credit if they bought their house between January 1, 2009 and December 31, 2009. The credit is not retroactive, so anyone who bought a home in 2008 does not qualify.
4. Household Income Limitations: A Single buyer with a gross income of $75,000 or less may qualify. Married couples with a gross income of $150,000 or less may also qualify. Home buyers earning more than these thresholds may still be eligible for reduced credits.
5. Refundable: Because the tax credit is "refundable," qualified buyers can take advantage of it even if they have little or no tax liability. The government will send a check for a portion or even all of the amount of the refundable tax credit.
6. Ownership Requirements: The home buyer must remain in the home for at least three years. If they sell the home before three years, they must repay the tax credit to the government (certain exceptions apply).
Please check with your attorney or tax advisor to make sure the new tax credit applies to you. For more information, visit http://federalhousingtaxcredit.com/2009/glance.php.
