$8,000 Housing Tax Credit

The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified buyers.

How you get the credit 

">
• What is a tax credit?
  
  A tax credit is a direct reduction in your tax liability.  This is different then a deduction.  A credit reduces dollar for dollar what you are required to pay in income tax.  So, if you normally pay 10,000 in federal taxes and you qualify for the 8,000 housing tax credit, you only have to pay 2,000 in federal taxes.
  
  
• Who is eligable for the tax credit?
  
  The tax credit is for first time home buyers.  First time home buyers means you haven't owned a home for the past 3 years. 
  
  
• Do you have to pay the credit back? 
  
  Unlike the bill passed in 2008, you do not have to pay this back.  You must maintain ownership and the property must be your primary residence for 3 years.
  
  
• What kinds of homes qualify?
  
  New construction, Single family residential, Condo's.  Basically any single family residence.  The only restriction is it must be your primary residence.
  
  
• How is the amount of the tax credit determined?
  
  The credit is equal to 10% of the purchase price up to $8,000.  For example a 70,000 home would qualify for $7,000 credit a 80,000 home would qualify for the full $8,000 credit.  If you purchase a $100,000 home you would only get the $8,000 credit.   
  
  
• Are there any income limits for claiming the credit?
  
  There are income limits.  For a married couple an adjusted gross income of $150,000 is the limit.  For a single person a $75,000 is the limit.  If you make more than this you could still qualify for a partial credit.
  
  
• Is this a refundable credit!
  
  Yes, lets say you only pay $5,000 in income tax.  If you qualify for the full $8,000 tax credit that means you will receive a $3,000 tax return.
  
  
• When does this start, and when does it end?
  
  You must purchase the home after January 1st, 2009 and before December 1st 2009.
  
  
• Is there a way to get the refund in advance and use the cash as a downpayment on the purchase of my home?
  
  Unfortunately no, you have to close on the property, at that point you can apply for the credit with your tax return.  If you have already filed your return you can amend it.
  
  What you can do if you are sure you qualify is reduce your income tax withholding amount.  Thats the amount that take from you from your pay check every week or month whenever you get paid.  You can elect to reduce that amount and that would increase what your bring home pay will be.