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$8,000 First Time Home Buyer Tax Credit

Update: The $8,000 First Time Home Buyer Tax Credit Extended [1] the deadline until June 30, 2010. In addition, it will now include a $6,500 Home Buyer Tax Credit for Existing Homeowners [2].

We finally have an enhanced first time home buyer tax credit! The President signed the Economic Stimulus Bill [3] Tuesday, which includes a $8,000 tax credit for first time home buyers.

$8,000 First Time Home Buyer Tax Credit

Even though the $15,000 Home Buyer Tax Credit [4] was proposed, it was cut back in negotiations.

The good news for home buyers, is that unlike last year’s $7,500 First Time Home Buyer Tax Credit [5], the 2009 home buyer tax credit doesn’t need to be paid back!

Here is additional information on the credit:

  • It applies to homes purchased January 1, 2009 through November 30, 2009.
  • You must keep the home for three years.
  • The credit is for $8,000 or 10% of the home’s value, whichever is less.
  • The credit is refundable [6].
  • You cannot have owned a home for the past 3 years.
  • It phases out for incomes between $75,000 to $95,000 for single and $150,000 to $170,000 for couples.

How to File for Your Home Buyer Tax Credit

A reader, Yvette, asked the following question:

Since the stimulus package was signed, when and where can I find the details for the $8,000 home buyer tax credit? We are in escrow now hoping to close by the end of this month and are holding off on filing our taxes because we would like to file the house for 2008. Also, do the tax software packages get updated with that info? Or that box for a tax credit?

In the original bill, you could elect to treat the $7,500 loan for a 2009 purchase on your 2008 taxes. According to the new 2009 bill, you can still make the election on your 2008 taxes. If you do this, you still will not have to repay it, if your purchase occurs during 2009.

I checked my version of TaxCut [7] yesterday, but haven’t seen any updates yet. I also haven’t seen any memos from the IRS yet.

In the past, in this type of situation the IRS usually updates the affected forms (Form 5405 is where you claim the credit), and the tax software packages follow soon after. However, we’ll have to wait to see how they decide to handle the increase to $8,000.

Otherwise, if you are really anxious, you could just claim the $7,500 on your taxes, and make an amendment for the other $500 once the forms are available.

Update: For instructions on how to get your tax credit, including the form to file with your taxes and what documentation you need to include, see How to Claim Your Home Buyer Tax Credit [8].

More Details

You can read the full text of the economic stimulus bill, called the “American Recovery and Reinvestment Act of 2009” on the White House’s site. The $8,000 home buyer tax credit is in section 1006 in the first and second files.

In addition, the President is planning more relief for homeowners and the housing market in the “Making Home Affordable Program [9].”