$8,000 Home Buyer Tax Credit
As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed legislation that grants a tax credit of up to $8,000 to first-time home buyers.
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HOMEBUYER TAX CREDIT |
FEDERAL |
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Amount of Tax Credit |
10% of purchase price not to exceed $8,000. |
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Principal Residence |
Yes. Property purchased must be the taxpayer’s principal residence which is generally the home the taxpayer lives in most of the time (26 U.S.C. § 121). |
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Type of Property |
House, condominium, townhome, manufactured home, apartment cooperative, houseboat, houstrailer, or other type of property located in the U.S. |
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First-time Homebuyer |
Yes. The buyer (and buyer’s spouse if any) must not have owned a principal residence during the three-year period before date of purchase. |
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Unoccupied Property |
No. Property may have been previously occupied or not. |
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Minimum Occupancy Requirement |
Must be the buyer’s principal residence for 36 months after purchase, otherwise credit must be repaid. |
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Income Restriction |
Yes. People with higher incomes can now qualify for the credit. The new law raises the income limits for homes purchased after November 6, 2009. The full credit is available to taxpayers with modified adjusted gross incomes up to $125,000, or $225,000 for joint filers. |
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Date of Purchase |
Has been Extended and Expanded to purchases between November 7, 2009 - April 30, 2010. If you enter into a binding contract by April 30,2010 you must close on the home on or before June 30, 2010. Previous expanded home buyer tax credit. January 1, 2009 to November 6, 2009, inclusive. (Note: A repayable $7,500 tax credit is available for purchases from April 9, 2008 to December 31, 2008.) |
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Refundable |
Yes. Any amount of the tax credit not used to reduce the tax owed may be added to the taxpayer’s tax refund check. |
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Repayment |
The buyer need not repay the tax credit if the buyer owns and occupies the property for at least 36 months after the purchase. |
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Multiple Buyers |
The $8,000 tax credit may be allocated between eligible taxpayers in any reasonable manner. Click here for an explanation with examples: Federal Homebuyers Tax Credit Allocation Unmarried Persons. |
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Maximum Credit for All Taxpayers |
N/A |
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When to Claim |
Full tax credit may be claimed on 2008, 2009, or 2010 tax returns. |
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Tax Agency |
Internal Revenue Service (IRS). |
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How to File |
First-Time Homebuyer Credit (IRS Form 5405) to be filed with 2008, 2009, 2010 tax returns |
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When to File Form |
Form 5405 must be filed with 2008, 2009, 2010 tax returns. |
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Exceptions |
Acquisitions by gift or inheritance, acquisitions from related persons as defined, and buyers who are nonresident aliens. |
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Legal Authority |
26 U.S.C. section 36. |
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Date of Enactment |
February 17, 2009. |
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More Information |
IRS Web site at http://www.irs.gov/pub/irs-pdf/p4819.pdf |
