The 2009 First Time Home Buyer Incentive
The IRS classifies the first time homebuyer as someone who has not owned a primary residence for 3 years. With that said if you’ve owned a home before but you’ve been renting for the past three years or perhaps living in your vacation home then you qualify for the 2009 tax incentive.
First time homebuyers purchasing owner-occupied homes between Jan. 01, 2009 and December 01, 2009 are eligible for a tax credit of $8,000.
The new tax credit provides you with a real tax reduction, rather than a decrease in your tax liability. Therefore, the $8,000 is not being subtracted from your income before taxes; instead, the tax credit is deducted from your taxes due. For example, if you were to owe $15,000 in income taxes and you qualify for the $8,000 tax credit, you would only owe $7,000 in income taxes.
Additionally, the first time homebuyers tax credit is refundable. If you have very little tax liability this year you can receive a check for the tax credit. For example, if you owe $5,000 in income taxes, the $8,000 tax credit will be applied to the amount you owe and you will collect a tax refund for the remaining $3,000. Not to mention if you’re owed a tax refund anyway; you’ll receive $8,000. on top of whatever Uncle Sam owes you!
The first time homebuyer tax credit is only relevant to homes that will serve as a principle residence. Single-family homes, townhouses and condominiums and manufactured homes and houseboats that will be used for your principle residence qualify. The only clause is that buyers taking advantage of this tax credit must remain in their new homes for three years. Sell your home before the three years is up and you’ll be required to repay the credit.
Other guidelines that preclude some individuals from qualifying include phasing out this incentive for couples with incomes above $150,000 and single tax filers with incomes above $75,000.