Until the 2009 economic stimulus package passed, first-time homebuyers could only get a $7,500 tax break. An $8,000 credit is now available; learn tax credit details.
A source of great confusion for many Americans is the first-time homebuyer tax credit. Until the passage of the 2009 economic stimulus package, officially known as the American Recovery and Reinvestment Act of 2009, taxpayers were eligible for a $7,500 interest-free loan from the federal government (taken as a tax credit, but repayable over 15 years). During stimulus package negotiations, there was talk of a $15,000 non-refundable true tax credit that wouldn’t have to be repaid & would be available to more than just first-time homebuyers; however, that measure did not make the final cut. Instead, the original $7,500 repayable loan has simply been enhanced.
2009 Economic Stimulus Plan: $8,000 First-Time Homebuyers Tax Credit Information
Under the original rules, qualifying taxpayers could get an interest-free loan of up to $7,500 for purchasing a home between April 9, 2008 and June 30, 2009. The loan was repayable over a period of up to 15 years (earlier if the house was sold), and the credit had to be recaptured (reversed) if the house was sold within 3 years.
The final stimulus package does not replace the original $7,500 tax credit; rather, the original credit is enhanced. Hence, most of the old rules still apply. Following are highlights of the differences between the original rules and the new ones:
The maximum credit is increased to $8,000.
The credit is now available until December 1, 2009.
For homes purchased between January 1, 2009 and November 30, 2009, the credit must no longer be repaid.
The same first-time homebuyer limitations (the person must not have owned a home within the past three years) and certain income limitations still apply.
Where to Get $8,000 Tax Credit Details, Text of Economic Stimulus Package Updates
The White House website has made the conference report text for the economic stimulus package, H.R. 1, available on its website in PDF and ASCII format. The report must be downloaded in five separate sections (the homebuyer tax credit appears in document 2 of 5); these can be accessed by using the link just provided or by following these steps:
Visit the White House homepage (whitehouse.gov).
Click on “The Blog.”
Scroll down and click on the February 16, 2009 post entitled “The story of the economic recovery package (photos).”
Click on “the finished product” hyperlink just above the slideshow.
Disclaimer: This article does not detail all of the rules surrounding the first-time homebuyer tax credit; it only highlights main differences between the original and updated rules pursuant to the American Recovery and Reinvestment Act of 2009.
The copyright of the article $8,000 Tax Credit for Home Buyers – Not $15,000 in Personal Tax Planning is owned by Lena Gott. Permission to republish $8,000 Tax Credit for Home Buyers – Not $15,000 in print or online must be granted by the author in writing.
Your piece here seems to imply that the $8,000 is a
loan that has to be repaid over 15 years and not a "gift".
However, you also wrote:
For homes purchased between January 1,
2009 and November 30, 2009, the credit must no longer be repaid.
I am a little confused about "the credit must no longer be
repaid," because that seems to imply that the $8,000 is a
"gift" and not a loan.
Would you clarify the answer to
the question, "If I am a first-time home buyer and I buy a house
between 1/1/2009 and 11/30/2009, do I have to repay the $8,000 tax
credit?"
Thank you.
Marty Y. Chang...
Feb 25, 2009 10:09 AM
Lena Gott :
Hi Marty,
I am sorry about the confusion. I can see how the
wording above is unclear & I'm going to write a follow-up article to
clarify some points. To answer your question, if you (as a first-time home
buyer) purchase a house between 1.1.09 and 11.30.09, you will receive an
$8,000 tax credit that you do not have to pay back.
~Lena
Feb 25, 2009 1:23 PM
Guest :
You mentioned that if the home is purchased by Nov. 2009, the credit would
not have to be repaid. Does also mean that when I file my 2008 taxes that
I will be able to get back an additional $7500-8000 more than the $3000
that I would already get back.
Feb 26, 2009 4:03 PM
Guest :
Dear Lena, I have just returned to the United States after living in
Puerto Rico for the last three years. Puerto Rico is a territory of the
United States and I owned a home there. Although I filed a federal income
tax return during the three years I was there, I only paid tax to the
Puerto Rican Government. I'm wondering if I would qualify under the
definition of a first time home buyer. I have not owned a home within the
50 states in the last three years and I plan on purchasing one this year.
Any insight would be interesting. I will probably write a letter to the
IRS too. -Chris Garrett
Feb 26, 2009 7:23 PM
Lena Gott :
Hi Chris,
That's a tricky one! My first instinct would be that
you ARE NOT eligible for a first-time homebuyer tax credit. I only say
this because although the rules say you must purchase a home located in the
U.S. to qualify for the credit, they also read that you cannot have owned A
primary residence in the three years leading up to that time (there is no
location requirement attached to that as far as I can tell).
The guidance and instructions I've seen to date haven't gone into this
kind of detail (not only because I don't know if you are allowed to have
previsouly owned a main home in another country within the past three
years, but I don't know if Puerto Rico technically qualifies as another
country under these rules).
My advice is for you to call the
IRS directly. I would be interested to know what you find out. Feel free
to comment back once you have a verdict! Sorry I couldn't be of more
assistance on this one! :)
~Lena
Feb 26, 2009 7:26 PM
Lena Gott :
To the guest who just asked "Does also mean that when I file my 2008
taxes that I will be able to get back an additional $7500-8000 more than
the $3000 that I would already get back?" ---
I need a
little bit more information to fully answer your question, such as the date
you purchased your home and what you paid for it (I assume you qualify as a
first-time homebuyer).
But, in general, you are allowed a credit
of up to 10% of the purchase price of your home. For homes purchased
between 4.9.08 and 12.31.08, that amount is capped at $7,500 (and is
repayable). For homes purchased between 1.1.09 and 11.30.09, that amount is
capped at $8,000 (and it doesn't have to be paid back).
~Lena
Feb 26, 2009 7:27 PM
Lena Gott :
Chris - Here is a link to the IRS phone numbers -
http://www.irs.gov/help/article/0,,id=96730,00.html
Feb 28, 2009 9:29 AM
Lena Gott :
Want to learn more about the $8,000 first-time home buyer tax credit,
$7,500 tax break, and the once-discussed $15,000 version? Here is a list of
5 articles on these subjects:
I would like to know if I qualify for this new $8000 tax credit. My husband
and I are first time homebuyers and purchased our home on 2/20/2009. We
purchased it from his parents. We have a mortgage payment and escrowed in
our taxes and insurance. My question is that on the 5405 form, it stated
you are not eligible if you 'acquire' the residence through inheritance or
'acquire' from family. We paid for it so we weren't given the home for
free. Does this make sense? Just hoping we qualify!!
Please let me know.
Mar 3, 2009 7:59 PM
Guest :
Dear Lena, I want to become a first time home buyer through an
individual who is willing to setup payment options, The question is do I
have to get a loan through a bank to apply for this tax credit?
Mar 4, 2009 9:24 AM
Guest :
Ok so I rushed to close on my 1st home because I wanted to use the points
toward my 2008 taxes. My closing date was December 30, 2008. Does this mean
(1) I can't have any of that 8,000 tax credit, and (2) if not are there and
additional tax credits I can apply for?
Mar 4, 2009 10:32 AM
Lena Gott :
Hi March 3rd Guest,
As far as I can tell, owner financing will
not disqualify you for this credit. To double-check, make sure to call the
IRS.
Here are some other articles you might want to read as
well:
You are correct - if you closed on
12.30.08, you do not qualify for the $8,000 credit. You only qualify for
the $7,500 interest-free loan. This article explains the differences
between the two in more detail:
Dear Lena, Do you have to buy a house to get the credit or can you
build your own home? My wife & I would prefer to build our own house
(secure construction loan and contract it ourselves) but we can't get a
straight answer to our question. I have asked several lenders and most
think that as long as you are done and close by 11/30 we are okay. But one
brought up the point that the premanent closing was a technically a
"refinancing" of the construction loan. The construction loan is
where you take ownership of the lot and agree to build the house, so would
the construction loan qualify me? Please help me out, I dont want to get
halfway done with the house and realize that I will not get the tax credit
and no one seems to know for sure. Steve
Mar 6, 2009 7:22 PM
Lena Gott :
Dear Steve,
You can get the credit for a home you build.
According to the instructions for Form 5405, "if you constructed your
main home, you are treated as having purchased it on the date you first
occupied it." So, you will need to occupy the house on or before
11.30.09 to qualify for the credit.
I recommend calling the IRS
to verify what I've said above. Whenever you have specific questions, it's
best to call the IRS to double-check. You can never be too cautious.
Let me know if you have any more questions. ~Lena
Mar 6, 2009 7:24 PM
Lena Gott :
Steve - here's a link to Form 5405 -
http://www.irs.gov/pub/irs-pdf/f5405.pdf
Mar 6, 2009 11:41 PM
Guest :
Hi, I am getting ready to purchase my first home. My question is this: I
would like to amend my 2008 tax return to include this credit in order to
help me with the various costs associated with the initial purchase, such
as appliances, flooring, closing costs, etc. I received $1700 back on my
return. Can I expect an ADDITIONAL $8000, or $6300 (the difference)?
Thanks, Sara
Mar 9, 2009 6:43 PM
Guest :
Ok heres one no one seems to know,,,, Do I qualify for the $8.000 grand
rebate if I build a new home????? and do a construction loan
jeff
Mar 9, 2009 8:35 PM
Lena Gott :
Hi Jeff,
I answered a similar question on March 6th (in response
to Steve). See above.
Thanks, Lena
Mar 11, 2009 12:18 PM
Guest :
I bought my first home on 1/15/09. I filed my 2008 taxes and received the
$7500 credit. Can I claim the $8000 as well if I don't mind paying the
$7500 back? Sarah
Mar 12, 2009 4:08 AM
Guest :
If I haven't bought a home to live in for over 5 years, Just rental
properties in business name, can I buy this year for me to live in and get
credit. Harry
Mar 12, 2009 6:20 PM
Guest :
Guest March 12, 2009 Dear Lena, Can someone buy a house under
land contract between Jan. 1, 2009 and Nov. 30, 2009 and be eligible for
the $8,000.00 tax credit that does not have to be paid back? The cost of
the house is $85,000.00. Also, if you're going to get back $1,500.00
on your tax return can you still get the $8,000.00 tax credit due to the
purchase of the house mentioned in the first sentence? Thanks, Terri
Mar 14, 2009 12:16 AM
Guest :
I filed online to get the 8000$ but IRS regected saying that only after
march 30-th filing online is accepted (for now only paper filing).Is that
right? Anybody there in the same situation?
Mar 15, 2009 9:15 AM
Guest :
Hello, I sold a house in June 2006 if I wait to close on a new house
in June 2009 will I qualify? I will make approx 120K from Jan 09 to Jan
10.
Mar 15, 2009 1:58 PM
Guest :
Hi Lena, My divorce was final this January. My ex-husband refinanced
our home in his name only in July 2007 because he kept the house. We had
jointly purchased our home in 1999 but refinanced a few times over the
years. Would this mean that I would not qualify for the new home
credit purchase since it was in my name too until 2007? Thanks, Susanne
Mar 16, 2009 3:17 PM
Guest :
The IRS is not accepting e-filed returns that claim the First Time
Homebuyer credit until March 31, if the amount you are claiming is over
$7500.
So if you are claiming this credit on Form 5405 for
$8000 you have to wait til then to e-file. You can however mail in your
return. But it would probably be quicker if you wait til March 31 and
e-file, since mailing takes up to 6 weeks.
Mar 25, 2009 4:59 PM
Guest :
Does an owner finance home qualify for the $8000 tax credit?
Apr 1, 2009 5:07 PM
Guest :
Can you use the tax credit as part of your downpayment on a new home? Thanks Jen
Apr 2, 2009 8:27 AM
Guest :
Do you qualify for the stimulus if you have owned a mobile home for the
last 5 years but rented the lot it is located on?
Apr 6, 2009 9:18 AM
Guest :
If i havent owned a home in the past 3years but have owned a home which i
sold in 2000, would I qualify for the tax credit if i purchase a home this
year?
Apr 8, 2009 8:43 PM
Guest :
I purchased a home back in 2004 using construction loans and long story
short the construction loans never got rolled into a conventional loan. I
just sold the house in August of 2008 after finishing the remodel and will
be purchasing a new house in May of 2009 - Does the previous house count at
a "first time home purchase" since it was done with construction
loans for a remodel and flip? Can I count the house I am closing on in May
as my first time home ?
Apr 10, 2009 5:14 PM
Guest :
Dear Lena, Can the property be a multifamily property such as a quadplex
since it is still considered residential. I would be using it as my primary
residence as I would be living in one of the units.
Thank
you.
Shandi Keller
Apr 28, 2009 11:11 AM
Guest :
Dear Lena, I want to buy a house zoned retail and I will live in part
of the house and have my business in part of the house. I will personally
own the house in my name. Will the home qualify for the tax credit if it is
zoned retail if it is my primary and only residence? Thanks Jason Nolen
May 21, 2009 4:16 PM
Guest :
Fisrt of all thank you for the information above. My question thought, is
how long would it take to receive the $8000 tax credit? Thank you.
Jun 4, 2009 12:34 PM
Guest :
CAN I GET THE TAX CREDIT IF I PURCHASE THE HOUSE FROM MY FATHER'S ESTATE.
THE HOUSE WAS LEFT TO ME AND MY SISTER.
Jun 4, 2009 1:33 PM
Guest :
Dear Lena, I was just wondering, my husband has financed homes but my
name was never on the deed, so if i purchased a home without his name on it
would i be considered a first time home buyer?
Jun 4, 2009 8:26 PM
Guest :
My husband would be a first time home buyer but I am not. If we bought a
house together would we qualify?
Jun 10, 2009 11:22 AM
Guest :
In my divorce agreement, I accepted the refinancing of the marital home and
don't have to pay my husband his portion of the equity. Can I refinance the
marital home with my boyfriend, who is a first-time homeowner, and make
claim to the $8,000 tax credit?
Jun 21, 2009 9:01 AM
Guest :
I bought a home in August of 2007 would I qualify for either credit?
Jun 24, 2009 2:51 PM
Guest :
I might be way off track but, I heard that a potential first time home
buyer could actually get the $8,000 in cash via his/her work income to
serve as the down payment for the home...Is this true? and, if so, how?
Jun 30, 2009 9:19 AM
Guest :
My husband and I purchase a home in May of 2009, we immediately did an
amendment with HR Block, and file it the week of May 15. How long should it
take to get the stimulus payment? Jill Jill
Aug 6, 2009 7:06 PM
Guest :
what is the probability of obama extending this 8000.00 tax credit until
2010?
Aug 10, 2009 12:51 PM
Guest :
Hi Lena, Okay, I'm going to explain this as best as I can. I am going
to make roughly $110-$120k this year and I am married to a military man
that is currently deployed. While over seas the government does not tax his
income and he will roughly make $60-$70k. He only will be deployed for half
of the year so half is taxable and the other half is not. We have had to
put about $15k into the house already and are planning on doing more
(flooring, repairing ceiling from water leaks, plumbing, etc.) What can I
write off (interest, any repairs?) and what portion of my husband's income
are they going to "count". We're trying to make it under the
$150k for married couples for the $8000 tax credit. Thanks for all your
help!
Aug 26, 2009 3:43 PM
Guest :
Lena, My husband and I have owned a home since 4/08. My son wants to buy it
from us. As part of the purchase price, we want to make a substantial gift
of equity. will he still qualify for the $8k rebate.
Aug 31, 2009 11:04 AM
Guest :
Dear Lena, my fiancee and I purchased a home this month. We are not married
until sept '10, co-signed the loan together, and currently file taxes
individually. Her CPA claims that we can therefore both receive the 8000.00
credit. We both qualify for the credit based on income guidelines, and all
other applicable criteria. Is this a legit loophole? Thanks
Sep 25, 2009 4:14 PM
Guest :
Hi, can you help us? I don't believe we qualify for the tax
credit, but I don't want to overlook it either. We are building our
"dream home" and are in our 50s, but we have had the property for
a good many years. The house we live currently live in--we have been
in over 15 years with intentions of, one day it being rental property. We
when we finish our house, that's exactly what we plan to do--rent it
out. Do we qualify for the credit? Thanks, Kath
Oct 28, 2009 7:43 AM
Guest :
Concerning the $8000 first time home buyers credit and primary residence.
I have property in Virginia that I have rented since May 2000. Due to my
job I relocated away from Virginia in May of 2000 and have not returned, as
such I have not used this property again as a primary residence. I am
purchasing a new home in Florida in a month and would like to know if in my
case I qualify for the $8000 first time home buyers credit since the above
home although owned by me but has not been a primary residence for over 9
years.
Feb 18, 2009
