First-Time Homebuyer Credit - for Realtors & Others

The First-Time Homebuyer Credit is a fully refundable $8,000 tax credit for buyers who have not owned a principal residence in the past 3 years. Find out more about this great opportunity!

Realtors and anyone considering purchasing a home should be aware of the First-Time Homebuyer Credit. This is a great opportunity for homebuyers to get some money in their pockets, but it will end December 1st, 2009.

This federal income tax credit is for people who have not owned a principal residence in the 3 years prior to purchase. So even if you owned a home before, you may still qualify for first-time homebuyer status. If the closing date on your newly-purchased home is Sept 1, 2009, and you sold a previous residence on August 31, 2005, and have not owned a residence since, you qualify as a first-time homebuyer for this credit. For a married couple, this applies to both spouses - neither spouse can have owned a principal residence during the prior 3 years.

This credit applies only to your principal residence - the place that you actually reside in. So you could have owned investment or rental property, so long as you did not own the home that you were living in. It also only applies to the purchase of a home that you are going to live in. If you sell or move out within 3 years, you will have to pay the money back.

The credit begins phasing out for buyers with a modified adjusted gross income of $75,000 for single people and $150,000 for married couples, and is eliminated for single people with a modified adjusted gross income of  $95,000 and $170,000 for married couples. For the majority of people, modified adjusted gross income will be the same as adjusted gross income, which can be found on the last line of the front of your 1040 for 2008.

The 2009 version of the credit is only for home purchases where the closing date is after December 31, 2008, and before December 1, 2009. It differs from the earlier credit available for homes purchased in 2008 in that the 2009 credit does not have to be repaid, and is fully refundable. That means that you will get the money back as a tax refund, even if you do not owe any tax.

The 2009 credit may be taken on your 2009 tax return that will be filed next year, but it may also be taken on your 2008 return, even for homes purchased in 2009. So if you have already filed your 2008 tax return, and you purchase a home during 2009 before December 1st, you can amend your previously-filed 2008 return to get your credit refund money in about 6-8 weeks, instead of waiting for next April. This option is a way to get the money to the homebuyer more quickly.

With interest rates historically low, and homes in the Seattle area available at the most affordable prices they've been in many years, the First-Time Homebuyer Credit just makes this an even better time for non-homeowners to consider whether it might be time to look for a home.