10 Things to know about the first Time Homebuyer Credit

Good news for home buyers, the U.S. government has extended the First-time homebuyer credit, and expanded it to include benefits for replacement homes.  Familiarizing yourself with the ten points discussed here can help you determine whether you qualify, and how the credit can help you save money.

1)  Your new house must be your primary residence, and located in the United States.  You can’t use it as a rental property or as vacation home.

2)  Your house must have been purchased between April 8, 2008 and May 1, 2010.  If you’re purchasing the home in 2010, be certain the closing date is before July 1, 2010.

3)  You (the taxpayer) and your spouse can’t have owned a primary residence in the last three years.

4)  If your new house is a replacement home that you’ve purchased after November 6, 2009 and you lived in your previous home for 5 of the last 8 years, then can take credit.  In other words, you aren’t really a first time buyer, because you used to own a home, but sold it 3 years ago.

5)  If you purchased your house in 2008, then the credit is similar to an interest free loan.  You can claim the credit now, but the full amount of the credit must be repaid over the next fifteen years.

6)  If you purchased your house before 2009, the credit is equal to ten percent of your purchase price – up to $7500.  If you purchased it between January 1, 2009 and May 1, 2010, then the maximum credit is $8000.   Long-term homeowners replacement purchase credit maxes out at $6500.

7)  Your house qualifies whether it is used or new-construction.

8)  If you’ve purchased a mobile home, or a permanently affixed travel trailer, it qualifies when land is also purchased.  In this case, the land and mobile home prices are combined.  

9)  You can’t take the credit if you’re a minor, unless you purchased the house before November 6, 2009.

10) Finally, if you purchased your house in 2009 and 2010, then it’s a refundable credit.  This means that the credit not only reduces the tax owed, but can also be a full refund on your return.

A further qualification is your income bracket.  If you purchased your house before November 6, 2009 then the credit begins to phase out at annual incomes of $150,000 married, and $75,000 single.  For purchases made after November 6, 2009, the phase out begins at $225,000 married and $125,000 single.

For more information, go to www.irs.gov, or go directly to the article at: http://www.irs.gov/newsroom/article/0,id=204671,00.html.  If you’re a qualified buyer, the newly expanded First-Time Homebuyer Credit may help save you some money.  In the process, it may just help stimulate the housing market.