Question: Who is eligible to use the tax credit?
Answer: The $8,000 tax credit is available for first-time home buyers only. The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. All U.S. citizens who file taxes are eligible to participate in the program.  A new tax credit for certain existing homeowners has been created. The amount of the new credit is $6,500. To qualify, an individual must have owned and resided in a home for any 5-consecutive year period during the last 8 years prior to purchase of a new home.

Question: Are there any payback provisions?
Answer: The tax credit is a true credit. It does not have to be repaid. The only repayment requirement is if the home owner sold the home within three years after the purchase.

Question: Are there income limits to qualify for the credit?
Answer: The new law increases the income limitation for homebuyers who want to claim the credit. The income limit for individual.  The new law increases the income limitation for homebuyers who want to claim the credit. The income limit for individual taxpayers has been increased from $75,000 to $125,000. The income limit for joint filers increases from $150,000 to $225,000.  To qualify for either credit, the price of the home being purchased cannot exceed $800,000.

Question: What are the effective dates for the tax credit?
Answer: First-time home buyers would receive an $8,000 tax credit if they enter into a written binding contract for purchase before May 1, 2010 and must close on the purchase before July 1, 2010.

Question: Is the tax credit refundable?
Answer: Yes. A refundable credit means that if you pay less than $8,000 in federal income taxes, then the government will write you a check for the difference. For example, if you owe $5,000 in federal income taxes, you would pay nothing to the IRS and receive a $3,000 payment from the government.
If you are due to receive a $1,000 tax refund from the government, your refund would grow to $9,000 ($1,000 plus $8,000 from the home buyer tax credit).

Question: What years can buyers apply the tax credit to their tax returns?
Answer: Buyers can take the tax credit on their 2008 or 2009 income tax return.

Question: What types of homes qualify for the tax credit?
Answer: All homes, whether single-family, townhomes or condominium apartments will qualify, provided that the home will be used as a principal residence and the buyer has not owned a principal residence in the prior three years. This also includes newly-constructed homes.

Question: Where can I find more details on the tax credit?
Answer: For more information, please contact our Online Home Adviser.