Frequently Asked Questions

FIRST TIME HOMEBUYER TAX CREDIT

Who is eligible for the credit?
Only first-time homebuyers are eligible. A person is considered a first-time buyer if he/she has not had any ownership interest in a principal residence in the three years previous to the day of the 2009 purchase.


What is this new homebuyer tax incentive for 2009?
If you purchase a home on or after January 1, 2009 and BEFORE December 1, 2009 you may qualify for a one time $8000.00 tax credit. Any home that is purchased for $80,000 or more qualifies for the full $8,000 amount. If the house costs less than $80,000, the credit will be 10% of the purchase price.


Is there an income restriction?
Yes. The income restriction is based on the tax filing status the purchaser claims when filing his/her income tax return. Individuals filing Form 1040 as Single (or Head of Household) are eligible for the credit if their income is no more than $75,000. Married couples who file a Joint return may have income of no more than $150,000. For individuals with higher incomes, the credit phases-out between $75,000 - $95,000 for singles and $150,000 - $170,000 for married filing joint. The closer a buyer comes to the maximum phase-out amount, the smaller the credit will be. The law provides a formula to gradually withdraw the credit. Thus, the credit will disappear after an individual's income reaches $95,000 (single return) or $170,000 (joint return).


Do I have to repay the 2009 tax credit?
NO. There is no repayment for the 2009 tax credit as long as you own and occupy the home for at least 3 years. If you claim the credit but then sell the property or move out within 3 years of the date of purchase, you are required to pay back the full amount of any credit, including any refund you received from it. A few exceptions apply. This provision is designed as an anti-flipping rule.


What if I die or get divorced or my property is ruined in a natural disaster within the 3 years?
A few exceptions to the repayment rule. If the homeowner who used the credit dies within the first three years of ownership, there is no recapture. Special rules make adjustments for people who sell homes as part of a divorce settlement, as well. Similarly, adjustments are made in the case of a home that is part of a involuntary conversion (property is destroyed in a natural disaster or subject to condemnation by eminent domain by an authorized agency) within the first three years.


I am buying a house from a relative, can I claim the $8000 credit?
NO. Any purchase of a principal residence (or interest in a principal residence) from a related party such as a spouse, sibling, parent, grandparent, aunt or uncle, etc. is ineligible for the tax credit.


I purchased my home in early 2009 before the stimulus bill was enacted. I claimed a $7500 tax credit on my 2008 return as prior law had permitted. Am I restricted to just a $7500 credit?
No, you would qualify for the $8000 credit. Eligible purchasers who have already claimed the $7500 credit on a 2008 return for a 2009 purchase may file an amended return (IRS Form 1040X) for the 2008 tax year. This amended return will enable them to obtain the additional $500 credit amount. You will also then qualify for the "non-repayment" portion of the 2009 bill. Congress anticipated this confusion and has made specific provision so that there would be no repayment of 2009 credits that are claimed on 2008 returns.

Mortgage Specialists, LLC
770 S. Main Street, Fond du Lac, WI 54935  •  920.921.0101
info@mortgagespecialistsllc.com

services | loan programs | our team | testimonials | faq | related links | contact us | home