While the proposed $15,000 home buyer tax credit died in negotiations between the House and the Senate, the $787 billion stimulus bill that President Obama signed into law Tuesday includes a similar, yet smaller amount, designed to help revive the real estate market. Here are some key things you need to know about the recently enacted $8,000 first-time home buyer tax credit:
- This credit is equivalent to 10 percent of the purchase price of the home, but it’s capped at $8,000. It applies only to first-time home buyers and principal residences. The best part about this credit is that unlike the previous $7,500 home buyer tax credit, this one does not have to be repaid.
- For the purpose of this legislation, a “first-time home buyer” is defined as someone who hasn’t owned a principal residence for three years before buying a house. (The date of purchase is considered the day that the title is transferred.)
- The credit is only available to those who purchased or built a home on or after January 1 and before December 1, 2009.
- The tax credit is subject to income limitations. Single buyers need a modified adjusted gross income of $75,000 or less to qualify for the full credit, that’s $150,000 for married couples. If you earn more you may still be eligible for a reduced credit.