If you’re still on the fence about acquiring a home, then Uncle Sam has just thrown an extra incentive for those of you that’s still debating on waiting further or buying — a nice fat, $8,000 incentive (it’s not $15,000 but you take what you can get, eh?).

Since they’ve been throwing around a bunch of different numbers and qualification scenarios, here’s the fairly-certain low down on the new home buyer tax credit.

To Qualify for the $8,000 “First-Time” Homebuyer Tax Credit:

  • Home purchase must be made between January 1, 2009 and November 30, 2009.
  • Must be a “first time buyer.” In order to qualify for this status, you must not have owned a home for the past three years.
  • You must also live in the purchased house for at least three years, or you’ll be obligated to pay back the tax credit.
  • Homebuyers must make less than $75,000 for single tax filers, or $150,000 for couples.
  • Higher-income buyers will receive a partial tax credit, but details have not yet been fully released.
  • Single family residence purchases (condominiums, townhouses, co-ops) that will be used as a principal residence will qualify.

How to Claim the Homebuyer Tax Credit:

  • Simply claim it on your tax return.  You will not have to filed any other forms or papers.  If you’re not a procrastinator like me and you’ve already filed your taxes, you can simply file an amended return for 2008 to claim the credit.
  • What type of tax credit is it? It’s one of the better type: a refundable one.  This means that if you don’t owe any taxes, you will get any excess credit in the form of a fat refund check.  Example: If you owe $1,000 in taxes, you’ll get a $7,000 refund check.  If you’ve overpaid $1,000 in taxes, then you’ll get a $9,000 check. You can read more about refundable tax credit in the resource link below.
  • If you’ve already claimed last year’s $7,500 tax credit, then you won’t be able to claim the $8,000 credit on next year’s return. It’s one credit or the other, buddy.
  • Unlike the previous $7,500 tax credit, there’s no repayment required for this $8,000 tax credit!  (Unless of course you sold your house within three years, as stated earlier).

Other Miscellaneous Notes:

  • If you’re buying into a retirement community, unfortunately, the purchase won’t qualify for the $8,000 first-time homebuyer tax credit.

This post will be updated as the IRS release further details upon their interpretation of the just-passed American Recovery and Reinvestment Act.

Regardless if you think the first-time homebuyer tax credit in the stimulus bill is a smart move or that it’s entirely bullsh*t  — the tax credit will certainly be a nice bonus for those that are looking to purchase a home in 2009.

Related Links & Resources: