Your Money Minute: Blog with Dennis Staaland

2009 home buyer tax credit

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In February, Obama signed into law the first-time home buyer tax credit. Here are six things you need to know if you already bought a house or are thinking about buying one in 2009:

1. A first-time home buyer doesn't necessarily mean someone who's never owned a house before.  It means someone who hasn't owned a principal residence for three years before buying a house. If you've owned a vacation home, but not a principal residence within the past three years, you would still qualify for the credit.
2. The tax credit is equivalent to 10 percent of the purchase price of the home up to $8,000. And, unlike the tax credit of 2008, this one does not need to be paid back.
3. The home must be purchased on or after January 1 and before December 1, 2009. Anyone who bought a house last year will not be eligible.
4. The tax credit is subject to income limitations.  Single buyers need to make $75,000 or less to qualify for the full credit, that's $150,000 for married couples. Those earning more than these thresholds may be eligible for reduced credits.
5. The tax credit is refundable. That means buyers can take advantage of it even if they don't have much tax liability. When filing out their tax return next year, whatever the buyer owes will be deducted from the credit and the balance will be sent to the taxpayer in the form of a check.
6. Buyers must own the home for at least three years in order to capitalize on the credit. If they sell the home before then, they will have to return the credit to the government.

Also something good to note: participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. No other applications or forms are required, and no pre-approval is necessary.