$8,000 First Time Homebuyer Credit

As most of you know, last year the government signed into law a first time homebuyer credit of $7,500 that needed to be paid back at 0% interest. This credit could be applied to qualified buyers that bought after April 9, 2008 and before July 1st, 2009. However, the stimulus bill that was passed by the Senate and the House and signed by President Obama states that if you qualify, you're going to get $8,000 from the government if you bought after January 1st, 2009 and are going to close on a home before December 1st, 2009 - and you don't have to pay it back as long as you keep the home for three years. This is how it will work:

  • It's a refundable tax credit that's lesser of 10% of cost of the home or $8,000. So as long as you buy a home over $80,000, you can qualify for the full $8,000 refundable tax credit.
  • Income restrictions still apply. The full amount of the credit is available for individuals that make no more that $75,000 ($150,000 on a joint return). The credit phases out above those caps ($95,000 for singles and $170,000 for joint returns). This means if you make in between these amounts ($75,000 - $95,000 for individuals and $150,000 - $170,000 for joint filers), you can still qualify for a partial credit.
  • If you close on your home after you file your taxes, you can file an amendment to your 2008 tax return (using Form 5405 and 1040X, see below) so that you can receive the check six to eight weeks AFTER you file that amendment. If you close on June 15th, 2009 and you file the amendment June 16th, 2009, you should get your check in the same amount of time it takes to receive any IRS refund check in July or August.
  • You do not pay this $8,000 back unless you sell the home within three years from your purchase date.
  • This credit applies to first time homebuyers only. The government's definition of a first time homebuyer is someone who has not owned a principal residence in three years prior to purchase.
  • The time frame is retroactive to January 1st, 2009 and goes through to December 1st, 2009. You must close on a home before December 1st, 2009 to receive the credit.

Click below to understand more!

 

U.S. taxpayers should use Form 5405 to claim the first-time homebuyer tax credit; the same form should be used for the $7,500 (last year's credit) or $8,000 credit (2009's credit). The IRS recently posted a revised version of the original Form 5405. The updated version reflects changes pursuant to the American Recovery and Reinvestment Act of 2009 (commonly known as the 2009 economic stimulus plan) that passed in February 2009.

Click here for IRS Form 5405

Click here for IRS Form 1040-X