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Time is running out for the First time homebuyer tax credit. Please see below for a few faq.

Frequently Asked Questions About the Home Buyer Tax Credit

The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for

qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before

December 1, 2009 .

The following questions and answers provide basic information about the tax credit. If you have more

specific questions, we strongly encourage you to consult a qualified tax advisor or legal professional

about your unique situation.

What is the definition of a first-time home buyer?

The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the

three-year period prior to the purchase. For married taxpayers, the law tests the homeownership

history of both the home buyer and his/her spouse.

For example, if you have not owned a home in the past three years but your spouse has owned a

principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit.

However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a

first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter.

Ownership of a vacation home or rental property not used as a principal residence does not disqualify

a buyer as a first-time home buyer.

How is the amount of the tax credit determined?

The tax credit is equal to 10 percent of the home's purchase price up to a maximum of $8,000.

Can you give me an example of how the partial tax credit is determined?

Just as an example, assume that a married couple has a modified adjusted gross income of $160,000.

The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this

amount. Dividing $10,000 by the phaseout range of $20,000 yields 0.5. When you subtract 0.5 from 1.0,

the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available

to this couple, multiply $8,000 by 0.5. The result is $4,000.

Here's another example: assume that an individual home buyer has a modified adjusted gross income

of $88,000. The buyer's income exceeds $75,000 by $13,000. Dividing $13,000 by the phaseout range of

$20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35

shows that the buyer is eligible for a partial tax credit of $2,800.

Please remember that these examples are intended to provide a general idea of how the tax credit

might be applied in different circumstances. You should always consult your tax advisor for

information relating to your specific circumstances.

What types of homes will qualify for the tax credit?

Any home that will be used as a principal residence will qualify for the credit. This includes singlefamily

detached homes, attached homes like townhouses and condominiums, manufactured homes

(also known as mobile homes) and houseboats. The definition of principal residence is identical to the

one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion

for principal residences.

I am not a U.S. citizen. Can I claim the tax credit?

Maybe. Anyone who is not a nonresident alien (as defined by the IRS ), who has not owned a principal

residence in the previous three years and who meets the income limits test may claim the tax credit for

a qualified home purchase. The IRS provides a definition of "nonresident alien" in IRS Publication 519.

Please contact Lorraine Angelil, Realtor for more deatails

Lorraine Angelil, Realtor

954-628-5911

www.lorraineangelil.com