$8,000 Tax Incentive for “First Time” Homebuyers
The economic stimulus bill recently signed into law by President Obama includes a really sweet perk for first-time homebuyers. But one of the things about the new rule that is misunderstood by millions of people is that the government and the IRS do not necessarily define a “first timer” the same way many Americans do. Just because you may have already owned a home – or bought and sold many of them over the course of your lifetime – it doesn’t automatically mean that you, too, don’t qualify for this $8,000 tax credit.
To meet the criterion of a first time homebuyer you must not have owned or co-owned your principle residence during the past three years. So if you have been leasing the home you live in – and you’ve been living in it for at least three consecutive years prior to the date you close on your new home purchase – you are considered a first time homebuyer. You can even meet this standard despite the fact that you’ve owned another property such as a rental cottage or beach house, as long as the house that has been your principle residence was not owned by you.
Household income is also a factor, and to be eligible for the $8,000 your adjusted gross income cannot exceed $75,000 (or $150,000 for couples). Consult a tax planner or Realtor to find out how the details apply to you and your particular circumstance. But don’t let the fact that you bought a house once upon a time stop you from jumping at the chance to get an $8,000 tax credit for buying a house this year.
Thanks for the information. I was confused a bit about how this worked because the salary cap seemed high. There are a lot of reasons why people would be renting these days especially since the real estate market property values were going through the roof it made it difficult for some to buy that otherwise would want to. Now that things are settling down it may be a good time to invest in your future by buying a new home.