Tax Credit

$8,000 Tax Credit

If you are buying a home this year, it is important to know whether you qualify  for the $8,000 Tax Credit for First Time Home Buyers.

Qualifications for $8,000 Tax Credit:

• Must purchase a home (close and receive title) on or after January 1, 2009 and before December 1, 2009.
• Must be a first-time home buyer, which means you cannot have owned a home for the past three years prior to purchase.
• Must use as a primary residence. The home cannot be used as a vacation home or rental property.
• Cannot purchase a home from a close relative such as your spouse, parent, grandparent, child or grandchild.
• Must make less than $75,000 for a single taxpayer or less than $150,000, if filing jointly.

About the $8,000 Tax Credit:

• Use as downpayment or closing costs — Initially, the tax credit was designed as a refundable credit on buyers’ tax return next year — either up to $8,000 or 10% — whichever came first. Now, a new HUD initiative allows qualifying first-time home buyers to receive these funds upfront to be used as a down payment or money towards closing, as announced by U.S. Housing and Urban Development Secretary Shaun Donovan. This has been referred to as a bridge loan.
• FHA-approved lenders, only — At this time, only the Federal Housing Administration (FHA) has issued guidance regarding the monetization of the first-time home buyer tax credit. Home buyers using FHA-approved lenders can apply the tax credit to their down payment.
• Home buyers must pay the 3.5 percent — While the $8,000 tax credit can be used for the down payment or closing costs, home buyers must still come up with FHA’s required 3.5% down payment on their own.