FAQs about the First-Time Home Buyer Tax Credit

FAQs about the First-Time Home Buyer Tax Credit

There are many questions about the first-time homebuyer's tax credit. With it set to expire in just a couple short weeks, we'd like to answer some of those questions so you can take advantage of it while it is still available.

The tax credit for first-time homebuyers is one of the ways the Obama administration has tried to jumpstart the economy and the housing industry. With all of the troubles that mortgage companies and homeowners have had in recent years, this may be one way to help people achieve the dream of owning their own home when they couldn't afford it before. Here are some frequently asked questions about the tax credit so you can understand it better.

When does the tax credit for first-time homebuyers expire?
The tax credit expires on April 30, 2010. However, the good news is that you only have to have a signed contract by April 30 to show that you are buying a home in order to be eligible. You actually have to have closed the deal and completed the purchase by June 30 of this year to quality for the credit.

Who can qualify for this $8,000 tax credit?
The first-time home buyer's credit is open to any person or family purchasing a home for the first time. The home can be either new or resale to qualify but the purchase must take place between January 1, 2009 and April 30, 2010. However, if you are claimed as a dependent on someone else's tax returns, you will not be eligible for this tax credit.

How is a first-time homebuyer defined?
First-time homebuyers are defined as buyers who have not owned a home as their principal residence for at least three years before the home's purchase. For married couples who want to qualify for the credit, both parties must fit into this category in order to be considered a first-time buyer.

How much of a tax credit will I get if I qualify?
The tax credit is equivalent to 10 percent of the purchase price for the home. The maximum credit, however, is $8,000. Therefore, if you purchase a home that costs $70,000, your tax credit will be $7,000. Consequently, if you purchase a home for $100,000, you will only receive an $8,000 tax credit.

How much money can I make before becoming ineligible for the tax credit?
This is a confusing part of the tax credit law so you may have to read this a few times to get it straight. For individuals purchasing a home, the income maximum is $125,000 for the full tax credit. For married couples, the income limit is $225,000 if the couple files jointly.

Now, if you make more than those figures, you may still be eligible for some amount of the tax credit. The cutoff is a margin of $20,000. That means that if you make more than $145,000 as an individual or $245,000 as a married couple, you are ineligible. With incomes between $125,000 and $145,000 for individuals or $225,000 and $245,000 for married couples, you will receive a percentage of the tax credit which will be calculated based on your income.

These are just a few things you should know about the first-time homebuyer's tax credit. It can be confusing, but it's pretty much free money so you won't want to miss out on that!

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  • Rosella

    December 21, 2010

    Personal finance.
    FAQs about the First-Time Home Buyer Tax Credit
    Article Submitted by: CA Hagy
    Real Estate

    There are many questions about the first-time homebuyer's tax credit. With it set to expire in just a couple short weeks, we'd like to answer some of those questions so you can take advantage of it while it is still available.



    Submitted: Apr 21, 2010 Views: 729 Comments: 1 Likes: 1

    The tax credit for first-time homebuyers is one of the ways the Obama administration has tried to jumpstart the economy and the housing industry. With all of the troubles that mortgage companies and homeowners have had in recent years, this may be one way to help people achieve the dream of owning their own home when they couldn't afford it before. Here are some frequently asked questions about the tax credit so you can understand it better.

    When does the tax credit for first-time homebuyers expire?
    The tax credit expires on April 30, 2010. However, the good news is that you only have to have a signed contract by April 30 to show that you are buying a home in order to be eligible. You actually have to have closed the deal and completed the purchase by June 30 of this year to quality for the credit.

    Who can qualify for this $8,000 tax credit?
    The first-time home buyer's credit is open to any person or family purchasing a home for the first time. The home can be either new or resale to qualify but the purchase must take place between January 1, 2009 and April 30, 2010. However, if you are claimed as a dependent on someone else's tax returns, you will not be eligible for this tax credit.

    How is a first-time homebuyer defined?
    First-time homebuyers are defined as buyers who have not owned a home as their principal residence for at least three years before the home's purchase. For married couples who want to qualify for the credit, both parties must fit into this category in order to be considered a first-time buyer.

    How much of a tax credit will I get if I qualify?
    The tax credit is equivalent to 10 percent of the purchase price for the home. The maximum credit, however, is $8,000. Therefore, if you purchase a home that costs $70,000, your tax credit will be $7,000. Consequently, if you purchase a home for $100,000, you will only receive an $8,000 tax credit.

    How much money can I make before becoming ineligible for the tax credit?
    This is a confusing part of the tax credit law so you may have to read this a few times to get it straight. For individuals purchasing a home, the income maximum is $125,000 for the full tax credit. For married couples, the income limit is $225,000 if the couple files jointly.

    Now, if you make more than those figures, you may still be eligible for some amount of the tax credit. The cutoff is a margin of $20,000. That means that if you make more than $145,000 as an individual or $245,000 as a married couple, you are ineligible. With incomes between $125,000 and $145,000 for individuals or $225,000 and $245,000 for married couples, you will receive a percentage of the tax credit which will be calculated based on your income.

    These are just a few things you should know about the first-time homebuyer's tax credit. It can be confusing, but it's pretty much free money so you won't want to miss out on that!Total Bonus Earnings: $0.00

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