April 22, 2009

Here are some general answers to common questions regarding the 2009 refundable tax credit for first time buyers:

Who is considered a first-time buyer?

A taxpayer who has not owned a primary residence during the 3 year period prior to the purchase date of the new home.

Who is eligible?

US citizens who file taxes and meet the additional 2009 tax-credit requirements.

What if my spouse has owned a primary residence over the past three years, but I have not?  Am I still eligible to receive the 2009 tax credit?

No, for married taxpayers – the law tests the history of home-ownership of the married couple together over the past 36 months.

How much is the tax credit?

The refundable tax credit is equal to 10% of the purchase price of the property or $8,000, whichever is lower.

So, it doesn’t have to be repaid?

No, as long as you owner-occupy the home as your principal residence for at least three years after the purchase date.

What does owner-occupy or primary residence mean?

This means you will occupy the home for a minimum of 50% or more of the time.

Are there eligibility qualifications in terms of income?

Yes. The tax credit is subject to the following income restrictions: Single home buyers need a modified adjusted gross income (MAGI) of $75,000 or less to qualify for the full tax credit amount. Married home buyers need a MAGI of $150,000 or less to qualify for the full amount. Singles with a MAGI between $75,000 and $95,000 or married couples with a MAGI between $150,000 and $170,000 may be eligible for reduced credits amounts.

What kind of property is eligible if I qualify for the tax credit?

Obviously, it needs to be in the United States – and can be a condo, town-home, single-family-detached, single-family-attached, and a couple more.

What are the effective dates for the 2009 tax credit?

On or after January 1, 2009 through December 1, 2009. Keep in mind that you have to actually close on or before December 1, 2009 – I.E. Title needs to be transferred to the new owner on or before this date.

Can I qualify for the tax credit if I purchase a home from a close relative?

No. You are not eligible if you are purchasing the home from a spouse, parent, grandparent, child or grandchild.

Can I get a tax credit if I finance the home via a state or local bond?

No.

What IRS form do I need to file with my return?

IRS form 5405 at http://www.irs.gov/pub/irs-pdf/f5405.pdf

Great Additional Resources:

NAHB: http://www.federalhousingtaxcredit.com/index.html

Iris.gov:  http://www.irs.gov/

Obama Stimulus FAQ: http://www.neighborhoodlink.com/article/Community/OBAMA_STIMULUS_FAQ

This article contains general information on the 2009 tax credit. Individual financial situations are unique – please, consult your financial advisor or tax attorney before utilizing any of the information contained in this post.

Michelle A. Potter

Broker Associate