Stimulus Package Good For First Time Homebuyers
The 2009 Economic Stimulus Package passed and was signed into law earlier this week. On Wednesday I posted about what parts of the stimulus bill will affect individuals, and what benefits you can receive from the stimulus package.
Today I thought I’d take a closer look at one of those benefits that first time homebuyers can expect to receive if they buy a house this year, the $8,000 tax credit. This really just makes it that much more of a buyer’s market!
What The Stimulus Bill Says
In Sec. 1006 of the 407 page Stimulus bill you’ll find the information about the home buyer’s tax credit. It reads:
Extension of and increase in first-time homebuyer credit; waiver of requirement to pay
What does this mean? It means that first-time buyers can claim a credit worth $8,000 – or 10% of the home’s value, whichever is less – on their 2008 or 2009 taxes. To qualify for the credit, the home must be purchased between Jan. 1, 2009 and Nov. 30, 2009.
You cannot have owned a house for the past three years to qualify as “first time” buyer. You also must live in the purchased house for at least three years, or you will be obligated to pay back the credit.
The tax credit does come with some income restrictions. To get the credit, homebuyers have to earn less than $75,000 for singles or $150,000 for couples. If you make more than that you may qualify for a partial credit.
Getting the credit should be pretty easy, just claim it on your return. No other forms or papers should need to be filed, and if you have already completed your return, you can file an amended return to claim the credit.
How To Get Your First Time Home buyer Tax Credit
A review of the provisions of the first time homebuyer tax credit:
- You cannot have owned a home for the past 3 years to qualify as a “first time” buyer.
- It applies to homes purchased January 1, 2009 through November 30, 2009.
- You must keep the home for three years.
- The credit is refundable.
- The credit is for $8,000 or 10% of the home’s value, whichever is less.
- It phases out for incomes between $75,000 to $95,000 for single and $150,000 to $170,000 for couples.
Remember, when buying a home it’s best to buy something you can afford (no more than 25% of your income), to put down a large down payment (at least 20%), and to get into a fixed rate only 15 year mortgage if you can. I talk more about this on my post about Financial Peace University’s lesson on real estate and mortgages.
Are you looking to buy a new home this year, and if so, will you qualify for this tax credit? Do you think this will help to stimulate the real estate market? Tell us about it in the comments!
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Thanks for clearing up the details of this credit. Sometimes it isn’t easy to identify exactly what is available in these bills.
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I understand that they’re doing this to stimulate the housing industry. But how is this fair to all those who purchased houses before 2008 and 2009. Are they going to have to pay this back or is it just going to be a free 8k? Either way it seems the financially responsible are getting messed over by all this bailing out.
If we go back , how far back do you think the Gov,t should go, if not 2008.
You should be happy that this gov,t is at least trying to clean up the previous gov,t mess.
I don’t understand why this bill is shown as an $8000 credit. Seems more of a propaganda number. If higher income families are not allowed to receive the money, and you only get 10% of a homes value, what 75k single will qualify for a 800k fannie may loan??? Maybe I misunderstanding something here. I think a lot of people are looking over the ten percent clause, or there are a lot of 800k homes on the market for 200k.
I believe to get the full credit you would just need to purchase a home of at least $80,000, not $800,000. 10% of $800,000 would be $80,000 dollars..
It would be 80,000 dollars 10 % of 80,000 not 800,000! 10% of 800,000 would be an 80,000 dollar stimulous check! Duh!
what about the old one of 7500 for first time home buyers…do they still have to pay it back?
For those asking how is this fair to current home owners, think about it again. If no one comes forward to buy new homes, we will continue to see more and more equity in our homes evaporate. We definitely dont want to see that happen. This will start making people buy homes and the housing market will start to stabilize.
see my site for more info on buying and selling home tips.
-Cheers!
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Not sure if you will be able to answer this, but I am selling my house currently, and am going to buy a house with my girlfriend, who has not owned a house. My question is, will she qualify for the first-time home buyers credit, or partially qualify? Or because I own a house is that pretty much out of the question?
Thanks,
Ben
I’ve got the same question, anyone know the answer to this one?
Hi, we are in the exact same situation ~ I am selling my home and my girlfriend and i are buying a home together ~ she would qualify if we got a mortgage together, however, her credit isn’t very good so the mortgage won’t be in her name but the deed would be. Would she qualify if she’s on the deed and tax records? I believe she should qualify ~ if anyone knows please let me know.
Thanks
If you are married if either spouse has owned a house in the past 3 years, you won’t qualify. If a girlfriend hasn’t owned a house in the past 3 years, and is buying the home alone, she may qualify. But if you buy together I don’t think you do. Again, double check with the IRS.
If I am qualified for the tax credit but my sister is not (she already owns a home with her husband), if we were to buy a house together, would I still be eligible for the the tax credit? Thanks for any feedback.
my mother passed away , I have three brothers.
She left the house to us to sell and divide money evenly. She had house paid off clean deed.
If I was to get a loan to buy out all my brothers and purchase the house would I qaulify for the 8,000 credit. I am first time home buyer.
It sounds like you would qualify, but I can’t say for sure. I would contact the IRS to verify that you would qualify.
Rod,
You will not qualify for the credit to buy your mother’s house. The tax credit explicitly states that buying from family does not qualify (I would assume to prevent people from taking advantage of this tax credit.)
No you wouldnt qualify because you cannot buy a house from a family member or any house a family memeber has owned is what I was told.
An acquintenance approached my son, requested that he “buy” his home and then rent it back to him as a way to get lower mortgage payments. He promised my son that he would collect the $8,000 tax credit and only have to come up with $4,000 down payment. On checking, I realized that my son would have to live in the house himself for three years; he could not rent it out. This man promised to pay the appraisal and closing costs, if my son would buy the house at its full price. I managed to derail this sale but feel that unscrupulous persons could take advantage of naive persons in this way. My son thought he would clear $4,000 and help this man out. oy!
No he wouldnt get it because your son has to live there and if they found out he didnt and tracked him down he would be in serious trouble….my husband was in the same boat
Is it $8k in an actual check or do you file $8k less in your income (which wouldn’t equal $8 in actual money)?
*(Wouldn’t equal $8 THOUSAND in actual money).
Yes, it should be an actual refund, so if you were set to receive a small tax refund of $100, you would now receive $8100. The link at the top of the page will have some information about it as well.
I’m in the process of buying a home, my mother is co-signing do I still qualify as a first time home buyer?Thanks
we make 225k joint annual income.. do we qualify for partial credit?
I have purchase a home and so I want to know what the next step is,how to get the 8k where do i get the forms and what forms do i need? HELP
The next step is to fill out this form, and then take the number it gives you and enter it on line 69 of your 2009 taxes, form 1040. If you want to claim it on your 2008 taxes, and have already filed, you will be required to file an amended income tax return if you want to receive the credit this year. If you file using a software, most tax software packages have now been updated to account for the credit.
once the irs recieves your amended tax return how long before you should recieve the $8,000 check in the mail? is it faster than filing a regular return?
We sent ours in may 21st and are still waiting after 12 weeks they asked for documentation, all along telling us it would take longer each time they reach when they said last they tell you 16 weeks now but that’s mon for us and we recieved a letter today saying we’ll get in touch with you by oct 21 that’s 22 weeks.
I just bought a house and had my 2008 taxes amended so I could get this money sooner. Any idea how long it takes to get it?
Sorry, I have no idea how long it will take to get back. I would guess a few weeks, but I don’t know? Congrats!
we are on 16 weeks now sent it in may 21st
Question ??? I am fixing to buy a new home that isn’t built yet and the builder said it will not be done by Dec,1. Have i lost the chance for the 8000.
If you haven’t closed by nov 30th, I don’t think you’ll be able to claim the credit.
we have lived in our home for 3 years we have a land contract, we are now getting a fha loan …..does land contract count as owning a home.. the deed is not in our name ..do we qualify for the first time buyers credit?
i’ve owned a house for at least 10 years. my husband, whom i married in nov. of 09, has never owned a house. can he qualify for first time home buyer’s credit
The answer I found on another site is this: If you are married, in order to qualify for the $8000 first time home buyer tax credit, both you and your spouse must be first time home buyers. A first time home buyer is one who has not owned a principal residence in the past three years. Thus if your husband/wife owned a house in the recent past and that house was a principal residence, (which means it was not rental property or vacation home) then unfortunately you do not qualify for the 8000 home credit.
We close on our house next week and qualify for the tax credit, but my husband is in the military what if he gets orders to a different post and we have to move in the next three years…do we have to pay it back?
Under the rules I’ve read you would have to pay it back if you didn’t live in the house for 3 years. I don’t know if there is a waiver of that requirement for military families or not.
Should I apply for the tax credit if I only paid 5000.00 dollars for the house?
I don’t see why not? You may as well. You’ll still get $500 or so?
I bought in Aug. 2008 (didn’t take the 7500 loan) and refinanced in Jun. 2009. Does my refi qualify for me this $8000?
We purchased our first home after 18 years of renting. I did some bad things to make a large down payment by drawing on my retirement. Therefore it raised my income level and I didn’t qualify for the $8000 on my 2009 tax credit. I was crushed, UNTIL a CPA suggested that I just ammend my 2008 tax return and now…I am waiting on an $8000 check!!! Wohoo!
Rod,
You will not qualify to buy your mother’s house. The tax credit explicitly states that buying from family does not qualify (I would assume to prevent people from taking advantage of this.)
Hey Guys,
The deadline was recently extended until April 30th, 2010 from December 1, 2009. So that gives you a few more months. The purchase itself can be made by June 30, 2010 but you must enter into a contract by April, 30th 2010.
My boyfriend and I our purchasing a home together. This will be my second home but I don’t qualify for the $6500 tax credit but he does qualify for the $8000 1st time buyers tax credit. Of the $8000, how much will he get if the house we purchase is around $200,000?