My article on the $7,500 first time home buyer tax credit has become one of the most popular on this site, with well over 200 comments. As part of this month’s economic stimulus bill, that credit is changing to an $8,000 tax credit that, unlike the first credit, will not have to be repaid. Here’s what we know:.
First of all, there is no $15,000 tax credit for new home buyers. That amount was originally part of the economic stimulus bill, but was reduced as part of spending cuts. It’s now an $8,000 credit. Next up, here’s how you qualify for this credit:
- Purchase a primary residence between January 1, 2009 and April 30, 2010 (purchase agreement must be signed by April 30 and you must close by June 30)
- With some exceptions, this purchase must be the first piece of real estate you have ever purchased
- You must stay in the home for at least three years
Update: Read more about how to claim the $8,000 first-time homebuyer tax credit. You may also want to read up on whether it makes sense to buy a home in this recession.
Update #2:Given the fact that I think this $8,000 first time home buyer tax credit is one of the most important financial opportunities for young Americans today; I have expanded my coverage of the credit with a frequently asked questions section.
Ready to go house-hunting? Save time, money, and aggravation by lining up your financing first with a mortgage pre-approval. Read my post on how to get no-obligation mortgage quotes online.
Need to file your taxes? Did you know you can prepare your federal income tax return online and for FREE with TurboTax? Learn more about TurboTax Online Federal Free Edition »
I'm David Weliver. At 26, I had NO savings and NO financial plan. I was maxed out, stressed out, and fed up. Then, I changed. I repaid $80k of debt, tripled my income, and bought a home. I'll show you how to get similar results. 
Josh Says:
February 20th, 2009 at 3:54 pm
I really wish people would quit calling these types of handouts “UNFAIR”. If there was no $8000 tax credit at all, nobody would be complaining to the government that they are being treated unfairly because they aren’t getting handed free money. Someone else is getting a gift and you are not. It’s a pretty childish/selfish response to the situation to only see the negative in that and complain.
Josh! You ought to catch an @ss whoppin for this post.
Mike Says:
February 22nd, 2009 at 5:45 pm
The only problem I have with this whole thing is simple. I will take my 7500 dollars I received for buying a new home. Thank you President Bush. President Obama claimed all of Bush programs sucked and did not help anything. So he changed it for his reign. He could of changed the old policy, most of them can be changed up to a year they were put in place, but chooses not too. For that reason, I am glad I did not vote for him and will actively vote against him next time. I do not care who he is running against. So thanks for nothing Obama. It is that simple
Right on Mike!
I completely agree with you.
I am confused about the 7500 tax credit and the 8000 tax credit. Are both still applicable or has the 8000 one replaced the 7500 thereby making all home buyers from last year disqualified from this 7500 tax credit.
Thank you all for your replies. I looked at form 5405 within TurboTax after I posted my question and realized it’d be difficult to take the credit this year. We’ll take it next year and not have to worry about an audit.
Will the tax credit of $8,000.00 be proactive for the people who purchased homes in 2008, during the midst of the Mortgage Crisis? I personally feel that the people who did their part as American citizens and continued investing in America while this crisis was unfolding, should enjoy the same benefits($500 more and no having to pay it back if you live in the house for three years) of the tax credit as those who purchased in 2009.
I agree totally, hence my post written below(above). I bought and closed escrow 14 days before Obama’s retro-active 1/01/09 cut off date. When I closed escrow I was not aware of any changes because Obama was not in office yet. Once he was in office, he rolled the credit back to 01/01/09, made it non-payable(pay back not required) and increased the credit by $500. So, I personally feel I got less, have to pay it back, and did just as much to help the economy as those who bought when prices sank even lower. Had I waited 5 months, I could have paid less for my home, and received MORE money, and wouldn’t have had to pay a dime of it back. I would settle for not having to pay it back, or pay less of it back. I am not being greedy…I am paying mine back. Those who closed escrow 14 days after I did are the lucky ones.
Called IRS today for those buying in 2009 after April 15th….file an extension if you haven’t filed yet. If you have filed, then amend after you purchase. The purchase price includes down payment and closing costs.
I went to the closing on Dec. 31, 2008 and finally closed after business hours. When I contacted the bank regarding a 2008 1098 to file, I was told I would only get a 2009 1098 as my loan start was for Jan 2009 as the paperwork was not valid until the next business day which was January 2, 2009. I would love to claim the $8000 credit but is the correct. I only assume it is as I will not get a 1098 for the year 2008.
Ky even if it was dec 31st you CAN take the credit. The date available is Dec 31,08 to Dec 2009′,Dec 31st so that you are able to claim it on your 08 taxes. So your good.
Not me. I closed 12/16/08, totally unaware of the changes implemented by a man who was elected, but not in office yet. It should be retro-active to 11/12/08, a day after the election, not 1/01/09, which is a calendar day which serves no significance other than the start of a new tax year, not the beginning of any mortgage terms.
I bought (signed on) a house in November of 2008. I also filed for taxes w/o getting the 7500 tax credit. How can I get this interest free loan after filing for my 08 taxes? – the amendment page that was posted earlier? Man I wish I held off a couple weeks HAH! Oh well, tis 0% loan will be great to pay off debt I have and buy my fiancee a nice laptop for her prof. school.
Thanks for the info
I am curious about the “exceptions” in your statement “With some exceptions, this purchase must be the first piece of real estate you have ever purchased”. Is this simply referring to the fact that if you haven’t owned in the previous 3 years but did before you’d qualify?
I’m a Realtor and have clients who purchased in late 08 rightfully upset over the 09 tax credit. My advise to them…Don’t take the $7500 if you don’t need it and if you do take it put it back into the property. Make smart improvements. You’ll have to pay it back so make sure it’s there to pay back. Many homeowners will find they won’t have to pay it back if they sell in the short term as it’s unlikely they will experience much appreciation. If you don’t make a profit when selling you don’t pay it back.
Not true. if you take the $7500 tax credit, you must pay it back if you sell your home within the next 36 months, regardless of P/L.
Turbo Tax will let you file on line March 31 with 8K tax credit. If you wish to file earlier you have to mail it.
Hi,
My dad and I just purchased our first home in feb 2009 and my name is on the deed of trust only and not on the mortgage. My dad cannot claim the tax credit due to his salary being over the income limit. Would I still qualify to receive this credit since I work and my salary is below this amount?
Unfortunately, I have to sell my home that I just purchased 6 months ago. Since I will definitly be loosing money on the house, should I amend my taxes and apply for the $7500? And since I will be loosing money do I have to pay that back?
I bought my house in August 2008 and qualified for the $7500 interest-free-loan/credit. Is this unfair since those who bought a house in 2009 get $8000 and don’t have to pay it back? NO IT IS NOT UNFAIR. I got exactly what I paid for (a house) plus the bonus of a $7500 interest-free loan. Sure I think now, “Man, if I would have waited I could get the no-repayment credit. Shucks!” But to cry foul? Unfair? Seriously, people! You aren’t entitled to ANYTHING that you weren’t expecting when you bought your home. Let’s all take a deep breath and remember that we all got what we paid for (a house) and some of us got a bonus on top of that. No more complaining… please!
Same question as Emma asked on February 25th, 2009 at 10:40 pm. Our current house that I bought in Dec 2001 and mortgage are on my name. Can my wife buy a house on her name, using our household income to qualify for a loan, and then claim credit on our joint return? We were planning on getting a new home this year and if there is a way to get 8000 credit I will not complain… and if there isn’t a way – UNFAIR UNFAIR… how come its only valid for new home buyers!?
Thank you!
So if for any circumstances your not able to buy a home but you got the $8000.00, What happens there? I know that it has to be paid back, but would it be in 2 years like everybody else?
If I just sold my mobile home in a trailer court and paid lot rent and I purchased a home 4/6/09 do I qualify for the $8000 first home buyer credit?
Awaiting response for question #67 by Yandy and question #68 by Kathy Bruss… Thanks
Something needs to be done here. Who do we need to write to or complain to? I purchased a home in 2008 and will have to pay back my credit as well. I understand that life isn’t fair, but this is ridiculous! The economy is no worse right now than it was a few months ago.
I’m 28 and just purchased my first home in November of 2008. I knew a little about the $7,500 tax credit when I bought my home, but I had heard that it needed to be repaid. It wasn’t the primary reason I went out and bought a house, but it was definitely one of the things that pushed me over the fence.
It was a pretty good time to buy a house, and I finally found something I liked after nearly a year of searching, so I jumped.
I wish I had just waited… Since buying the house, I’ve already refinanced because banks were gouging qualified buyers on rates at the time I closed, even though THEY were able to borrow money at historically low rates. So I’m out my original closing costs, in exchange for a 1% lower interest rate (which is still about 2% higher than what they are giving people who aren’t paying back their loans via mortgage adjustments). Now I find out that 6 weeks is all that separated me from having a $7,500 LOAN or $8,000 free money with no strings attached?
I waited a long time to buy my first house, and I tried to do everything the right way. I saved my money, I put 20% down, I have great credit, I bought within my means, I’ve been responsible. I’ll make the most of the $7,500 loan, but I honestly think that if they’re just going to hand people the money with no strings attached in 2009, they should ammend the original 2008 tax credit so that it works the same way.
I’m a little tired of being a responsible citizen and continually getting screwed over for it.
I’m the guy standing right behind you saying “yea, me too!”
I closed 12/16/08. Obama was elected 11/11/08. He wasn’t in office until after 1/01/09, so if he was going to ‘roll back’ the qualified buyers date, why not make it 11/12/08?
Man, there are a lot of complainers on here. If we should amend 2008 why not amend 2007. If we amend 2007, why not 2006. Give me a break. Now people are complaining about interest rates?
I was going to buy at the end of 2008. I held off because the writing on the wall was there to see that interest rates where going to continue to drop. Now I will get the full 8k. Oh yeah!!!!
you’re forgetting why this whole program exists, smarty. STIMULUS. The $7500 stimulated me. But not as much as the FREE $8000 would have. I am not complaining about the tax credit. I am complaining because of the date it was retro-active until (1/01/09). That date serves no political significance, economic significance, or interest rate significance. It was just another date on a made-up calendar. I don’t need it to roll back to anything other than a significant date, not year. The day the man was elected, is a significant date for “his” stimulus packages to roll back to, wouldn’t you say?
Tom, I feel you. I totally agree 100% with you. It was not presented as a loan. Chris, shut up. If you bought your home in 2008 you would be complaining too. Quit gloating over something that is so unfair! You should pay back the $8000 OR people who bought their home in 2008 should not have to. Simple as that. We all pay taxes. I can understand about interest rates changing as they do BUT THIS is totally different and outright unfair.
Amen Michael. Why should those who bought in 08 be treated any differently than those who bought 2 days later/2 weeks later/2 months later. We did the same thing. Hell, we took less money from Uncle Sam AND we have to pay it back.
Give me a break. I didn’t buy a house in 08 because I have plenty of gray matter between the ears unlike some of the complainers on here.
If I did, I would except it and I wouldn’t complain about it.
Michael… where do you draw the line?
Funny thing is that you can’t change it, so vent away. I think it is funny.
Yea, it’s funny until you find out you have to pay it back.
The line should be drawn when the word STIMULUS was mentioned. Draw the line there and give EVERY one who bought a home when that word was involved A BREAK.
Give the laughing hyena a break??? Now THAT is funny.
Michael, I agree. If the man was elected in November, and decided to offer tax credits to “his” country’s citizens, then why start Jan 1, 2009? He wasn’t in office on that date any more than he was in November 08.
If you got the $8000.00 credit but you did not bought a house what’s gonna happend next and how the money will be repaid back to the goverment.
After finding an article listed on Yahoo.com today, my husband and I now realize that if we move out of our home before the 1st time home buyer credit has been fully repaid, we immediately will have to pay the difference! (We got the $7500, our closing was Oct 2008) We tried to do as much research before accepting this credit but I guess we didn’t do enough
We don’t plan on staying in our new home for 15 years. It was a starter home for us to get out of an apartment. Does anyone know if there’s a way to simply give it all back now and not wait the 15 years? We aren’t spending a dime of it. So much for stimulating the economy with all that money!
Just find the appropriate office that the money goe sto and send them the money back. You can probably get that form your tax agent.
My fiancee has never purchased a home before. Could I sell my current residence to her before we are married and she would qualify for the tax credit? Could I be a co-signer on her loan to purchase my house?
Rick: See form 5405 on the IRS website. It details who can or cannot claim the credit. Since she is not a relative or ancestor, I don’t see why you couldn’t sell it to her and have her claim the credit. Now the co-signer part I don’t know about. Doubtful that you could be because you already “own” the home.
We sold our home in 2008 and purchased a new home in 2009. We figured our family was expanding and we could also help the economy in the process. Guess what, because we owned a home in the past three years, we aren’t qualified for any kind of credit from Uncle Sam. Is this fair? We are responsible consumers, but yet this is how the government rewards the responsible consumers? I think they should give everyone who purchased a new home a credit if they are giving out any kind of credit because everyone who purchases a home is actually helping the economy. No? Not to mention, if you own a home for the past three years, but you rented it out during that time, you still qualify for this credit. *sigh*
I am in contract for a new construction and have not owned a home in the past three years. My usual tax return is around 5500. This year I got that PLUS 7500 for the home tax credit. The stupulation is that over the next 15 years, instead of getting 5500, i will get 5000. there is no money coming out of my pocket. If I sell the house within three years, I have to give the tax credit back from the proceeds from the sale of the home. I am not sure why everyone is so upset because technically no money is coming out of our pocket. I know some dont have to repay the tax credit, but so what! What if the government was not giving anything at all to anyone? I have to repay, but am grateful to have garnered the closing cost, money for the upgrades, plus whatever else I want to spend the money on. The payback is reasonable to me whether I have to “repay” or not.
Tonya- the problem would be that not everyone gets a significant amount on their return
Rick -
look into a gift of equity as a condition of the sale of the house. Then that becomes he down payment. Might need a prenup before you turn over everything to her but it gets you off as a co signer.
good luck
Hello, can anyone tell me whether or not my husband who is purchasing a home in his name only would qualify for the 8000 tax credit?
I own a duplex and live in it currently and also rent out half…he is not on any loans or titles for that place. He has not owned anything in the last three years either. Confused, any info would be great. Thanks
I want to know if I can quaify for the first time homebuyers money this year. I purchased a home 4 years ago and lost it due to a divorce settlement about 18 month ago. I did not take any first time homebuyer loans on it and I took a loss on the whole operation. I lost the home to my former spouse. I have seen some language on eceptions for reasons of divorce settlements. Does anyone know how that would play out? Over the past 3 years I only resided in that home for full time for one year and was living separate for a large portion of that time but the home was still in my name until she sold it last April.
Colin
I recently read in the paper that Obama had said the the tax credit could be used for closing costs or down payment. Is this true?
So I was just wondering: I usually get around $3000 back on my income tax… so when I buy a house, does that mean that I will get that PLUS the additional $8000 tax credit, which will equal around $11,000? Right? Am I right or wrong? Please let me know!! Thanks!!
I want to know if I can quaify for the first time homebuyers money this year. I purchased a home in 1997 and lost it due to a divorce settlement about 2007. I did not take any first time homebuyer loans on it and I took a loss on the whole operation. The home was sold, because of the divorce. Iseen some language on eceptions for reasons of divorce settlements. Does anyone know how that would play out? I moved out of state in 2005 and live there since then, for 3 years. I have not resided in that home since after I left. But it was still in my name until it was sold it 2007 April. Would I still be able to get the tax break, because I’m getting ready to buy a new home.
As long as you have not purchased a home within the last three years you can qualify as a first time home buyer
That is so nice of the government,I wish government in our country will offer such good things to us.
Mike says “THANK YOU PRESIDENT BUSH” what an idiot!!!! Five days before the 9/11 catastrophe Mr. BuckFush signed the P4P agreement with Canada , Mexico and the U.S. In that agreement he appropriated $400 billion to place 5 million mexican immigrants in homes by 2010. He also removed ALL regulations governing Wall st. , Banks and the Mortgage industry. It allowed Wall street to sell over 100 trillion in credit default swaps worldwide. Wall street and the Federal Reservew (Bush’s real boss’s) knew these were toxic and they were not insured and were guaranteed to explode, which they did. My Son has been trying to buy a home as a first time home buyer for 2.5 months and we have been beat out 13 times by cash buying investors. None of the banks want to modify loans or at least very damn few do because it’s easier to throw people out and then collect on their own default insurance for 70% of the money then make up the differance by selling the homes dirt cheap at an auction or a reduced price.Get over it….Obama is President and thats final!With everything that the NAZI Buckfush set in motion with the P4P agreement, the Revised Patriot act and his NSPD-51 in May of 2007 I really doubt if AMERICA as we have known it will even be around after mid 2010. So get ready WHINERS there are drastic changes coming!!!
Wolfman
Does it matter if you owned a home in different state as your primary resident and sold it less than three years ago to quailify for the 8,000 tax credit for firt time buyers?
Is there any way around the new income max? I closed on my new home in Sept ’09 and did not qualify for the $7.5k credit, but it sounds like the limit has been increased, but only if I bought a house after Nov.
I took advantage of the $7500 tax credit since I closed escrow on 12/16/2008 on my first home. When I heard that I missed the $8000 tax credit by 15 days, I was upset. When they expanded this tax credit, they could easily have gone retro-active to 10/31/08 OR make the credit non-payable(pay back) for those home buyers who purchased homes within 90 days of the 1/01/09 tax credit date. I am fortunate to have the tax credit, but I am saddened that not only did someone who closed escrow 14 days later get a bigger tax credit, but they never have to pay theirs back. I find this disturbing. It reminds me of the commercial with the two little girls and the toy pony vs real pony. favoritism is no way to help the economy.
Has anyone even thought of where the HELL is this money coming from to stimulate the economy? HELLO MORANS YOU ARE ADDING TO THE DEFICIET! Its doing nothing but hurting the economy than its helping, heck look at what Clinton did this is why we are in the situation we are in now! Whats going to happen when we cannot afford to pay this 8K to everyone who bought a house last year? OH I forgot we will just print more money! I forgot our president and government think we have a money tree! This just proves how stupid and ignorant people are to stuff! This is what happens when government makes rules and regulations on the housing industry but forget they know nothing about how it works or never have worked in it before they just think it sounds good an whose left to clean up there mess the TAX PAYERS! We the ones getting the shaft while they are making it sound like there doing you a favor!
we’re already paying for it. We pay for it every time we get a paycheck. When was the last time you were not double-triple, or even quadruple taxed?
It’s easy for un-employed, disabled, part-time employee, or students to bad-mouth the system when they seem to have it all figured out. I have been a tax payer for 25+ years in this country. I pay taxes on my income, on everything I buy, every dividend I earn from MY earned money, every gallon of fuel I use to drive to work, and then once a year, Uncle Sam tells me I didn’t pay enough taxes, so I get to pay more. I bought a home so I can KEEP some of what I earned. if Uncle Sam wants to give me some extra money to fix up the house I bought at 70% off because some low-life, dead-beat non-paying scumb bag decided to vandalize the place before the bank(who shouldn’t have loaned them the money in the first place since they obviously couldn’t afford it)repossessed it, then that’s my prerogative. Just explain to me again why this is a bad idea? And explain to me where my social security money will be when I retire? Oh, and explain to me again why I have to pay MY loan back, when Joe who closed escrow 15 days later does not. Make sense, and I’ll listen. Spout off ignorance, and I’ll ignore you…next time.
A Graig u rock. Thats how its told. Mad as hel. U need to get the f out if you dont like it. I pay my dues and if I get a tax credit it cause I deserve it. I put alot back into this country and its about time to get something back.
My son filed for this credit and it has been a royal headache since that day (jul 09), He has sent in his information 3 – 4 times and talked to the IRS numerous time, They have denied his claim twice for not receiving information although the data was faxed to the IRS as requested.
This is being used as a ploy to get young people to purchase homes, so it appears as though the housing market is picking up. I am only aware of one person that actually received money from the IRS. To data all they have done for my son is given him the run around, we are now 7 months later and still no money and still the run around from the IRS.
Get ready to dig in your heals if you decide to go this route to purchase a home. Also don’t bet on the money ever being delivered to you. At this point its just a ploy.
you don’t “receive” money. It is a tax CREDIT. All he needs to do is claim it on his 2009 tax return. It then becomes a credit and should he be receiving a refund for his 2009 tax filing, he will then receive a check.