First-time home buyer tax credits

Do you qualify for a first-time home buyer tax credit?

If a home buyer is purchasing a primary residence for the first time, he can qualify for the First-Time Home Buyer Tax Credit. Only a few requirements are in place in order to qualify.

Authorized by the Housing and Economic Recovery Act of 2008, the first-time home buyer tax credit is a real benefit for many taxpayers. It permited first-time home buyers the opportunity to take a $7,500 tax credit when they file their federal taxes. For 2009, the credit amount was increased to $8,000.

In addition to the requirement that this must be the first purchase of a home for the home buyer, the home must also be purchased between January 1, 2009 and December 1, 2009. The home can either be new construction or resale construction, which opens the door for all types of home buyers. The closing or settlement date is considered to be the date of purchase in regard to this matter.

A first-time buyer is defined as someone who has not previously owned a primary home or residence in the three years occurring prior to the purchase of the qualifying home. If a married couple is involved in the purchase of the residence, then both of their previous home-buying histories come into play. If one spouse has previously purchased a primary residence in the three years prior to this purchase, neither spouse will be able to take the first-time home buyer tax credit.

However, if the home buyer has previously purchased a vacation home in the previous three years, he still qualifies for the first-time home buyer tax credit. The vacation home is not defined as a primary residence so it does not disqualify the home buyer from obtaining the tax credit.

Likewise, if the home buyer has previously purchased a rental home in the previous three years, he still qualifies for the first-time home buyer tax credit. Since the rental home is not used as a primary residence, the home buyer still qualifies for the first-time home buyer tax credit.

For more information, see: First-time homebuyer tax credit FAQs