First Time Buyer – $8000 Tax Credit

In order to revive the real estate market, president Obama signed in to law an act that allows first time home-buyers an $8000 tax credit. Here are a few things that you need to about the new law

– The credit is equivalent to ten percent of the value of the home, although it is capped at $8000 and it applies only to first time home buyers and principle residences. However, this tax credit unlike the previous home buyer tax credit does not have to be paid back.

– A first time home buyer is defined as a person who has not owned a principle residence for three years before buying a house.

– Only those who purchase a home between 1st January 2009 and 1st December 2009 are eligible for the tax credit. Those who bought a house in 2008 will not be eligible for the credit.

– There is also an income limit for an individual to claim the credit. Single buyers will need an adjusted gross income of $75,000 or less in order to qualify for the full tax credit. For those who make more than this amount, the tax credit may be reduced.

– The tax credit is refundable and qualified buyers can take advantage of it even if they do not have much tax liability.

– Buyers who take advantage of this tax credit must own the house for at least three years before they can sell it. If the property is sold within three years, the homeowners will have to return the credit back to the government. However, exceptions may be made in the event of death or divorce.