How to Get a First-time Home Buyer Tax Credit

The Federal Government First time home buyer tax credit may allow you to receive up to $8000 off the purchase of a new or resale home, but you're going to have to move fast. You'll need to qualify for the first time home buyer credit and also close on the house deal before December 1, 2009. So, come along to find out more about this wonderful program.

Difficulty: Moderately Easy

Instructions

1. ~~Investigate eligibility rules for the first time home buyer tax credit program~~
   
   It might be easier to be eligible as a 'first time' home buyer than you realize. A 'first time home buyer' is defined as someone who hasn't owned a principle residence for the past 3 years. Now, this gets a bit tricky in that, for a married couple, neither person must have owned a home in the past 3 years - you will both be disqualified if you try to receive the tax credit. For unmarried joint purchasers (such as a parent and a child buying a home together), just one party must qualify for not owning a residence, even if both of you will be on the deed of the new home.

2. ~~Qualify for the income limits for the program~~
   
   In simple terms, single purchaser home buyers of a new or resale home must stay under a maximum income of $75,000 per year. For joint home buyer purchasers, the government allows a maximum of $150,000 income per year. Now, of course, there's more to this if you have Modified Adjusted Gross Income (MAGI). More information may be found in the first resource below.

3. ~~Determine the tax credit amount and claim the credit on your federal income tax return~~
   
   Use IRS Form 5405 to determine the allowed tax credit amount (remember, it's 10% of the home's value or up to $8000). Claim the amount determined on line 67 of the 1040 income tax form for 2009 returns.

Tips & Warnings

• For the purposes of the first time home buyer tax credit program, the principle residence 'home' can be a single-family detached home, townhouse, condominium, houseboat or a mobile home (manufactured home).

Resources

• First time home buyer tax credit program rules
• How to bargain for anything
• While you're at it, get a new car with Cash for Clunkers program
• Cash for clunkers - more info
• First time home buyer tax credit info at a glance

[Gottaloveit]

on 10/25/2009 Sorry, billy - the tax credit is for principle residences only. If you own income property you're out!

[billybgarrett]

on 10/10/2009 •The tax credit is for first-time home buyers only. For the tax credit program, the IRS defines a first-time home buyer as someone who has not owned a principal residence during the three-year period prior to the purchase.

This states principal residence, so what if you have purchased an income property yet have not and will not reside in it. Do you still qualify?

[joanhaines]

on 9/28/2009 Those who are at the right place with savings and ready to buy a first home are in a great position. Go for it!