Frankly Speaking Blog

Many people want to know what the deal is with the $8,000 First-time Home-buyer Tax Credit. The American Recovery and Reinvestment Act of 2009 authorized a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence.

Now, some have confused this credit with tax deductions, but this is not the case at all. The exciting news is this tax credit is real cash in your pocket! Below are answers to a few commonly asked questions.

Am I eligible to receive the tax credit?

You are eligible if you are a first-time home buyer or you have not owned a home in three years, and you must earn less than $75,000 annually if single or $150,000 for couples.

What is the amount of the credit?

The tax credit is $8,000 or 10% of the home’s purchase price, whichever is less.

What must I do to receive it?

First, purchase a home and then claim the tax credit on your 2008-2009 taxes. Even if you owe money from your tax return you can still receive the full $8,000! You must buy your home between January 1, 2009 and December 1, 2009.

Will I have to pay this money back?

Only if you live in the home for less than three years. Stay put for three years and you will not have to pay it back.

What do I do if I have already filed my 2008 taxes?

If you have filed your 2008 return, all you need to do is file an “amended” return for 2008 to claim your tax credit.

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In summary . . .

• You do not have to repay it unless your home is sold within three years.
• It is available to first-time homebuyers, or if you have not owned a home within the last three consecutive years.
• It applies to your home purchase made between Jan. 1, 2009, and Dec. 1, 2009.
• It is for individuals whose adjusted gross income is $75,000 or less, and for married couples whose combined adjusted gross income is $150,000 or less.
• The amount available is up to 10% of your home’s purchase price, up to a maximum of $8,000. 
• It can be claimed on your 2008 tax return even when you purchase a home in 2009.

In addition to this wonderful tax credit incentive, home prices and interest rates are extremely low right now, but this won’t last forever. All the resources you’ll need to find a good home at a great price are right here. So take advantage of this golden opportunity before it is too late!