$8,000 First-Time Home Buyer Tax Credit

Author: Anya

Author: Anya

The information below pertains to the American Recovery and Reinvestment Act of 2009 Fist Time Home Buyer Tax Credit:

$8,000 tax credit is only for the first time home buyers (IRS defines a first-time home buyer as someone who has not owned a principal residence during the three-year period prior to the purchase).

First time buyer can purchase any kind of housing (single family home, town house, condominium, mobile home and even houseboat), but the purchase must occur on or after January 1, 2009 and before December 1, 2009; the purchase date = the day when closing happens.

There are income limits to qualify for the tax credit. The limits are $75,000 for single taxpayer and $150,000 for married taxpayers filling a joint return.

The tax credit does not have to be repaid back; however home buyers must use their home as a principal residence for at least three years.

To claim tax credit you need to claim it on federal income tax return. Homebuyers have to complete IRS form 5405 to determine their tax credit amount and then claim this amount on line 67 of the 1040 income tax form for 2009 returns. No other application or forms are required, and no pre-approval is necessary.

You will not qualify for home buyer tax credit if you purchase a home from your ancestors, children, grandchildren or your spouse.

The home tax credit is refundable meaning credit can be claimed even if the taxpayer has little or no federal income tax liability to offset.

You can access the money allocable to the tax credit before 2009 tax returns. Potential home buyers who belive they meet the criteria for the tax credit are allowed to reduce their income tax withholding up to the amount of credit. However buyers should adjust their withholding amount on their W-4. About the Author:

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