We are getting a lot of questions about the $8,000 Tax Credit, so here is a summary on how it works.
First time home buyers purchasing any kind of home – new or resale – are eligible for the tax credit if they purchase the home between January 1 and December 1, 2009. A “first time home buyer” is defined as someone who has not owned their principle residence for 3 years prior to the purchase. You do not have to pay this money back as long as you keep the home for more than 3 years. This is free money!
This is a tax credit, meaning that you will literally receive $8000 more from the IRS on your 2009 tax return. For example, if you normally would get $2000 as a tax refund, you will get a check from the IRS for $10,000. (The tax credit is 10% of the home’s purchase price up to $8,000.)
Keep in mind that single buyers need a modified adjusted gross income of $75,000 or less to qualify for the full credit, or $150,000 or less for married couples. Those who earn over these limits are eligible for partial credits.
I hope this explanation helps!