$8,000 First Time Homebuyer Tax Credit is Winding Down, Just 8 Weeks Left to Find a Home

by benborden

For first time homebuyers out looking for homes that will utilize the $8,000 tax credit, times a running out. November 30th, 2009 is the final day to close and with the new Truth in Lending MDIA disclosure it could take up to 45 days to close on the loan.

The First Time Homebuyer Tax Credit was passed as part of Obama’s American Recovery and Reinvestment Act of 2009, signed into law by President Obama on February 17, 2009, crediting up to $8,000 in tax payments to qualified first time home buyers. The maximum tax credit for an individual first time home buyer is 10% of the purchase price, up to $8,000.

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

Must be a first time home buyer defined as no home ownership in the last 3 years, so prior ownership does not disqualify them only home ownership in the last 3 years
No repayment is required if the buyer owns and occupies the property for 36 months
The tax credit starts to phase out for an individual taxpayer with a modified adjusted gross income from $75,001 to $95,000 for single filers and $150,001 to $170,000 for joint filers.

Who does not qualify for the $8,000 First Time Home Buyer Tax Credit?

The property is acquired from a related person
The property is acquired by gift or inheritance
The buyer is a nonresident alien
The buyer disposes of the property before the end of such taxable year

A common misconception about the $8,000 First Time Home Buyer Tax Credit is that it is a true credit and not a deduction. So if you typically get a refund you would get $8,000 above and beyond your typical refund. Conversely if you owe every year your $8,000 would be deducted from the amount you owe.

You can check out the IRS publication at your convenience and remember if you do not have a ratified contract and make loan application by October 15, 2009 chances are your will not close by the November 30, 2009 deadline and you will end up at the short end of the stick.

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