The $8000 tax credit for first time home buyers is a significant incentive to purchase a home. This is a credit not a deduction, which means it directly reduces the taxes owed - dollar for dollar. This gives the new home owner directly as much as $8000 cash in the pocket at tax refund time. The credit incentive is retroactive back to January 1, 2009 and continues through November 30, 2009. The incentive is 10% of the purchase price up to a maximum of $8000.
The incentive applies to any single family residence (including condos, co-ops and town homes) that will be used as a single family residence. This credit can remove or eliminate income tax liability for the year of purchase. Any unused amount of the tax credit is refunded to the purchaser. The incentive is available to individuals who make less than $75,000 and to couples who make less than $150,000. Above these income levels the incentive is reduced and is completely phased out at $95,000 for an individual and $170,000 for a couple. The purchaser and purchasers spouse must not have owned a principle residence in the 3 years prior to purchase.
For more details on the tax credit and repayment provisions, please see a tax accountant.
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Do I qualify the $8000 tax credit if I own a rental property in Washington other than a primary residence? I'm getting a house in California.
I recently got married a few weeks ago and I'm planning on buying a house, but my wife bought a house in 2006. Can I file my taxes seperate from my wife and get the $8000 refund?
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.