The federal government is providing a first-time home buyer credit of up to $8,000 for qualified
purchasers of a principal residence in 2009. However, that program is scheduled to end as of
December 1, 2009. Although other incentive programs, such as the “cash for clunkers” giveaway,
were extended beyond the originally scheduled termination date, there is no indication that the
first-time home buyer credit will be extended beyond its originally scheduled termination date.
To qualify for the credit, the first-time home buyer must close escrow on or before November 30,
2009 and meet other eligibility requirements (see below).
Unfortunately, many factors can delay the close of escrow. Such factors include, but are not
limited to: the buyer’s ability to secure financing; the seller’s ability to resolve any and all
outstanding financial obligations affecting the property; and the condition of the property.
Mortgage professionals have no control over any or all of these potential timing problems and thus
are not able to guarantee the precise date that escrow will close.
2009 First-Time Home Buyer Tax Credit Facts
Who is Eligible
• The $8,000 tax credit is available for first-time home buyers only.
• The law defines “first-time home buyer” as a buyer who has not owned a principal
residence during the three (3) year period prior to the purchase.
• All U.S. citizens who file taxes are eligible to participate in the program.
• The tax credit is a true credit. It does not have to be repaid.
• The only repayment requirement is if the homeowner sold the home within three (3) years
after the purchase.
• Home buyers who file as single or head-of-household taxpayers can claim the full $8,000
credit if their modified adjusted gross income (MAGI) is less than $75,000.
• For married couples filing a joint return, the income limit doubles to $150,000.
• Single or head-of-household taxpayers who earn between $75,000 and $95,000 are eligible to
receive a partial first-time home buyer tax credit.
• Married couples who earn between $150,000 and $170,000 are eligible to receive a partial
first-time home buyer tax credit.
• The credit is not available for single taxpayers whose MAGI is greater than $95,000 and
married couples with a MAGI that exceeds $170,000.
Effective Dates for the Tax Credit
· First-time home buyers can receive an $8,000 tax credit for the purchase of any home on or
after January 1, 2009 and before December 1, 2009. To qualify, you must actually close on
the sale of the home during this period.
Tax Credit is Refundable
• A refundable credit means that if you pay less than $8,000 in federal income taxes, then the
government will write you a check for the difference.
• For example, if you owe $5,000 in federal income taxes, you would pay nothing to the IRS
and receive a $3,000 payment from the government.
• If you are due to receive a $1,000 tax refund from the government, your refund would grow
to $9,000 ($1,000 plus $8,000 from the home buyer tax credit).
· Buyers can take the tax credit on their 2008 or 2009 income tax return.
Types of Homes that Qualify for the Tax Credit
• All homes, whether single-family, townhomes, or condominium apartments will qualify,
provided that the home will be used as a principal residence and the buyer has not owned a
principal residence in the prior three years. This also includes newly-constructed homes.
For more details on the tax credit, go to www.federalhousingtaxcredit.com