$8,000 Home Buyer Tax Credit at a Glance

• The tax credit is for first-time home buyers only.
• The tax credit does not have to be repaid.
• The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
• The credit is available for homes purchased on or after January 1, 2009 and before December 1, 2009.
• Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.

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.

1. Who is eligible to claim the tax credit?
   
            
            
   
   
2. What is the definition of a first-time home buyer?
   
            
            
   
   
3. How is the amount of the tax credit determined?
   
            
            
   
   
4. Are there any income limits for claiming the tax credit?
   
            
            
   
   
5. What is "modified adjusted gross income"?
   
            
            
   
   
6. If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
   
            
            
   
   
7. Can you give me an example of how the partial tax credit is determined?
   
            
            
   
   
8. How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008?
   
            
            
   
   
9. How do I claim the tax credit? Do I need to complete a form or application?
   
            
            
   
   
10. What types of homes will qualify for the tax credit?
    
             
             
    
    
11. I read that the tax credit is "refundable." What does that mean?
    
             
             
    
    
12. I purchased a home in early 2009 and have already filed to receive the $7,500 tax credit on my 2008 tax returns. How can I claim the new $8,000 tax credit instead?
    
             
             
    
    
13. Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?
    
             
             
    
    
14. Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?
    
             
             
    
    
15. I live in the District of Columbia. Can I claim both the Washington, D.C. first-time home buyer credit and this new credit?
    
             
             
    
    
16. I am not a U.S. citizen. Can I claim the tax credit?
    
             
             
    
    
17. Is a tax credit the same as a tax deduction?
    
             
             
    
    
18. I bought a home in 2008. Do I qualify for this credit?
    
             
             
    
    
19. 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?
    
             
             
    
    
20. If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?
    
             
             
    
    
21. For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?
    
             
             
    
    

The Law’s Other Provisions

In addition to the tax credit, the American Recovery and Reinvestment Act of 2009 has several other provisions that will benefit home buyers and the housing market. The legislation:

• Will help home buyers in high-cost markets by extending the FHA, Fannie Mae and Freddie Mac loan limit of $729,750 through the end of 2009.
• Allows state housing finance agencies to help buyers at closing by advancing the credit as a loan using proceeds from tax-exempt bonds.
• Extends the tax code section 25C credit for energy-efficient home improvements through the end of 2010; increases the credit rate from 10 percent to 30 percent; raises the lifetime cap from $500 to $1,500; expands the list of eligible improvements.
• For 2008 operations, expands the net operating loss carryback period from two years to five years for small businesses (businesses with average gross receipts of no more than $15 million over the previous three years).
• Temporarily allows exchange of Low-Income Housing Tax Credit allocating authority for tax-exempt grants and appropriates $2 billion in HOME funding for affordable housing projects.
• Provides a "patch" for the Alternative Minimum Tax for tax year 2009.
• Increases bonus depreciation and section 179 small business expensing for business investment in 2009.
  Increases New Markets Tax Credit allocating authority for 2008 and 2009.
• Delays for one year—from 2011 to 2012—the start of the three percent government contractor withholding requirement.