What you should know about the
Tax CreditThe American Recovery and Reinvestment Act of 2009 offers an $8,000 tax credit for first-time buyers who purchase a home on or after Jan. 1, 2009, and before Dec. 1, 2009. Unlike previous tax credits for first-time buyers, this one doesn't have to be repaid.
Details of the tax credit include:
Buyers claim the credit on their federal tax return to reduce their tax liability. If the credit is more than the taxes owed, the buyer will get a refund check for the taxes owed plus the difference.
Only first-time homebuyers can take advantage of the tax credit. A first-time buyer is defined under the tax credit as an individual who has not owned a home in the past three years. Eligible properties include anything that will be used as a principal single-family residence - including condos and townhouses.
There are income guidelines on the credit. Individuals with an adjusted gross income up to $75,000 (or $150,000 if filing jointly) are eligible for the full tax credit. The credit is phased down for those earning more and is not available for those with an income above $95,000 ($170,000 if filing jointly).
The new tax credit does not have to be repaid if the buyer stays in the home at least three years. If the home is sold before that, the entire amount of the credit is recaptured on the sale.
The Homebuyer Tax Credit: Understanding the Basics - view these Frequently Asked Questions