Seattle Condo Blog and Community Information

The 780 billion-dollar economic stimulus plan – the American Recovery and Reinvestment Act of 2009 – includes an $8,000 first-time home buyer tax credit. Though we were all hoping for the originally proposed $15,000 tax credit, the 8K is still reason to celebrate.

Here are the top 10 things you need to know if you hope to take advantage of the tax credit:

1. The $8,000 tax credit is for first-time home buyers only. (“First time” means you cannot have owned a home for three years before your current purchase)

2. It can be applied to 2009 home purchases closing before December 1, 2009.

3. The tax credit does NOT have to be repaid (unlike the 2008 tax credits, which were considered loans).

4. It applies ONLY to your principal residence (not vacation homes or additional property). Which means you, the taxpayer, must live there.

5. If you are building your own home, the date you move in is considered the date of purchase and December 1, 2009 is still the magic number.

6. The tax credit maxes out at 10 percent of the purchase price, up to $8,000. Given the Seattle area market, you can expect the full 8K.

7. IRS income qualifications: If you’re single and you make less than $75,000 annually, or you’re married and jointly make less than $150,000 annually, you are eligible for the full $8,000 credit.

8. IRS Provisions: You have to own this home and make it your primary residence for three years from date of purchase to fully capitalize on the tax credit. You will have to return the credit in full if you sell the home before the three years are up. In cases of death or divorce, the IRS will make exceptions.

9. You can claim the tax credit on the IRS Form 5405 – the First-Time Home Buyer Credit – which will be filed with your 2009 federal income tax return.

10. You CANNOT take advantage of the tax credit IF you purchase your home from: your parents, grandparents, child, grandchild, or spouse.

Tags: first time condo buyer, home buyers credit

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