$8000 Home Buyer Tax Credit in New Stimulus Plan

Via on Feb 20, 2009

thehomefront_mullinsThe new Economic Stimulus Plan includes an $8000 Tax Credit for First Time Home Buyers OR those who have not owned a home for 3 years. Unlike the $7500 tax credit from last year, this credit does NOT have to be re-paid as long as you own the home as your primary residence for at least 3 years. You have to purchase a home between January 1, 2009 and November 30, 2009 to qualify.

The credit is refundable, meaning that you can get the refund even if your tax liability is less than $8000. It is actually based on 10% of the purchase price and capped at $8000 meaning that as long as you buy a home over $80,000, you qualify for the full $8000 credit.

The catch – there are income limits. $75,000 for individuals and $150,000 for married couples to get the full credit. If you earn more than that, you may still qualify for a partial credit.

If you sell the home within 3 years, you will have to return the credit to the government. (Exceptions will be made in certain cases, such as death or divorce.)

The idea behind this tax credit is to revive the housing market by encouraging first time home buyers to act now. If first-time home buyers jump into the market, then sellers of starter homes can move up to more expensive properties and those sellers can buy even more expensive homes and so on. Interest rates are still low as well, hovering around 4.875%, so the hope is that the combination of these two factors will help jump start the slow housing market in time for the usually busy spring selling season.

blog by elephant’s realtor – Liz Benson

About Liz Benson

Liz Benson is a Realtor/EcoBroker with Colorado Landmark Realtors based in Boulder, CO. She is also Mom to a lovely teenage daughter and an energetic border collie. When not juggling those duties, she enjoys travel, riding her vintage cruiser and DIY home improvements.

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8 Responses to “$8000 Home Buyer Tax Credit in New Stimulus Plan”

  1. Meaning I could get this, Liz?

  2. John Joseph says:

    Thanks for explaining this – very helpful!

  3. [...] change, and trying to help people, not just corporations. Example: first time home buyers get an $8000 tax break thanks to the Obama Administration’s efforts to keep our bubble economy, popped, from spiraling down [...]

  4. mathew says:

    Thanks for your info.Hope the stimulus plan will let Economic recover soon at 2009.

  5. Manhattan NY says:

    It seems Economic is recovering recently.Economic Stimulus Plan may have some effect.

  6. Via Dunbar Hardy, of Boulder Colorado:

    The $8,000 Tax Credit De-Mythed

    It seems every day I hear a new story about the government's $8,000 tax credit for new homebuyers. A lot is being said, but not everything is accurate. Here are the facts:

    The tax credit is a true credit – if you owe less than $8,000, the IRS will refund the difference.
    The tax credit can be claimed on your 2008 taxes under some circumstances (namely if you haven't filed yet or file an amended return).
    The tax credit is not available for use as a downpayment (there are many stories about government plans to make the credit available for the downpayment, but currently no program exists at the federal, state or local level).
    You can claim the tax credit if a co-borrower has owned a home in the past 3 years (this will vary based on your specific situation, but if you are living together but not married then you can still get the credit, and if your parents/guardians are co-signing and you are not claimed as a dependent on their taxes then you can get the credit, but if you are married and one of you has owned in the past 3 years you cannot claim the credit).
    You cannot claim the tax credit if you are purchasing the home from a "close" relative (as defined by the IRS, or from a business you own – sorry folks).
    If you have more detailed questions about the tax credit please contact a CPA or your tax preparer.

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