$8K First-Time Home Buyer Tax Credit Now Available, Explained in Detail

Though I'm sure you've already heard the news about the new $8,000 first-time home buyer tax credit, I wanted to share three excellent articles and resources that do a great job explaining in layman's terms.

The first article and resource is from U.S. News & World Report. Here's an excerpt:

1. Eight grand, new buyers: The tax credit included in the economic stimulus legislation is much narrower than the $15,000 proposal. This credit is equivalent to 10 percent of the purchase price of the home–although it's capped at $8,000–and applies only to first-time home buyers and principal residences. But unlike an earlier $7,500 home buyer tax credit, this one does not have to be repaid.

2. First time buyers defined: For the purpose of this legislation, a "first-time home buyer" is someone who hasn't owned a principal residence for three years before buying a house. (The date of purchase is considered the day that the title is transferred.) That means if you've owned a vacation home–but not a principal residence–within the past three years, you would still qualify for the credit.

3. 2009 buyers only: Only those who purchase a home on or after January 1 and before December 1, 2009 are eligible for the credit. Anyone who bought a home last year won't be able to take advantage of it.

The second is from Jay Thompson (aka The Phoenix Real Estate Guy). Here's an excerpt:

Will this revised tax credit stimulate a housing market recovery? Maybe. Maybe not. Personally, I think the Senate’s version which was a $15,000 tax credit (that could be evenly split over two years), wasn’t subject to income restrictions and most importantly was for ALL, not just first-time, buyers would have been more successful. But that’s water under the bridge. It’s gone. What we have is what we have. This is a nice incentive for first-time buyers, and the fact that it is both refundable and does not have to be repaid is a significant improvement over the existing “credit” (which was really a zero interest loan).

The third is from Ben Martin over at VAR buzz. Here's an excerpt:

If you’re thinking…

“Oh great! Just as I had figured out the 2008 first time home buyer’s credit, they go and pass a new one with different rules!”

Fear not!

Here are two handy-dandy resources from NAR that will help you make sense of it for yourself and your clients.

I'll end this post by quoting Jay Thompson… "I am not a tax professional, nor do I play one on TV or the Internet. You should seek advice from a CPA or professional tax preparer. If the IRS comes after you with guns blazing for anything you read in this post or anything you think you read in this post, it’s not my fault. Seek professional help!"

Other related articles:

First Time's a Charm – The Wall Street Journal/Market Watch