$8,000 First Time Buyer Credit - Time Is Running Out

Are you aware that the $8,000 first time buyer credit expires on Dec. 1 NOT Dec. 31 this year?

What is it?

An $8,000 refundable tax credit for first time home buyers provided under the American Recovery and Reinvestment Act of 2009. It is available only to first time home buyers who buy a primary residence between Jan. 1, 2009 and Nov. 30th, 2009.

This is a tax credit and not a tax deduction. It is a true dollar for dollar reduction on taxes owed.

The credit can result in a true tax refund. For example, a qualifying 1st time buyer who would normally get back zero on their 2009 taxes would receive a tax refund. Better yet, if you already filed and paid your 2008 taxes, you can file an amended return and the IRS will send you a check for $8,000 (you can't owe any back taxes, though).

What is it not?

It is not a loan and does not have to be repaid if the property is owned for more than 3 years. However, if the home is sold within 3 years it must be repaid.

Who is eligible?

Anyone who has not owned a principal residence in the past 3 years. Single taxpayers with an Adjusted Gross Income (AGI) up to $75,000 and married taxpayers with a joint AGI of up to $150,000 are eligible for the full $8,000. A lesser tax credit is still available for home buyers with income above these amounts, up to $95,000 for individuals and $170,000 for joint AGI.

How do I get it?

Buy a primary residence and close on it before Dec. 1, 2009. There will be a scramble on over the next few months as people hurry to get in on this before it expires so don't wait until the last minute. If you do, you won't have as much selection and maybe less room to negotiate.

The IRS form used to request the tax credit is IRS Form 5405.

I will be giving all kinds of other tips about this and how you can get even more money to buy or reduce your payments. There will be tips and traps especially for people getting married and for veterans and investors and and and...

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