$8000 Tax Credit Incentive 
Ø Who is eligible to claim the tax credit?
First-time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax
credit, a home purchase must occur on or after
January 1, 2009 and before
December 1, 2009. For the purposes of the tax
credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner.
Ø 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.
Ø 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.
Ø Are there any income limits for claiming the tax credit?
Yes. The income limit for single taxpayers is $75,000; the limit is $150,000 for married taxpayers filing a joint return. The tax
credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers
and $150,000 for married taxpayers filing a joint return. The phaseout range for the tax credit program is equal to $20,000. That
is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is
reduced proportionally for taxpayers with MAGIs between these amounts.
Ø 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 single-family 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.
Ø Is there any way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2009 tax return?
Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding.
Reducing tax withholding (up to the amount of the credit) will enable the buyer to accumulate cash by raising his/her take
home pay. This money can then be applied to the downpayment.Buyers should adjust their withholding amount on their W-4
via their employer or through their quarterly estimated tax payment.
IRS Publication 919 contains rules and guidelines for
income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit
qualified purchase does not occur, then the individual would be liable for repayment to the
IRS of income tax and possible
interest charges and penalties.Further, rule changes made as part of the economic stimulus legislation allow home buyers to
claim the tax credit and participate in a program financed by tax-exempt bonds. Some state housing finance agencies have
introduced programs that provide short-term credit acceleration loans that may be used to fund a downpayment. Prospective
home buyers should inquire with their state housing finance agency to determine the availability of such a program in their
community. The National Council of State Housing Agencies (NCSHA) has compiled a list of such programs
For more information of Federal Housing Tax Credit visit
www.federalhousingtaxcredit.com
