First time home buyer tax credit

In February 2009, the American Recovery and Reinvestment Act of 2009 was approved by the U.S. Congress and signed into law. The bill contains good news for first time home buyers — the opportunity to receive up to an $8,000 tax credit if you purchase a home by November 30, 2009 and you otherwise qualify. Here are some important facts about the credit:

• You must be a first-time primary residence home buyer OR you must not have owned a primary residence within the past 3 years prior to the date of your 2009 home purchase. If you're married, both you and your spouse must meet this definition of "first-time home buyer".
• You must CLOSE on your home purchase between the dates of January 1, 2009 and November 30, 2009. This means that you must go to settlement and take ownership of the home between those dates.
• The tax credit equals 10% of the home's purchase price, up to a maximum of $8,000.
• There are a handful of special rules and exceptions in this bill that impact the amount of tax credit you can claim on your specific tax return, including whether you're married filing separately or whether you bought the home with a non-spouse.
• There are income limitations. See the web site listed below for exact language of the bill as it appears in the stimulus plan.
• Unless you own and live in the home for 36 months after purchasing it, you may be required to pay back some or all of the tax credit on a future tax return. After 36 months, you can sell or move out of the home without having to pay back any of the tax credit. There are certain exceptions to this payback rule.
• Even though your home purchase will be in 2009 to qualify, you may claim the tax credit on either your 2008 or 2009 tax return.