First-Time Home Buyer $8,000  Tax Credit: 6 Things to Know 

 1. Eight grand, new buyers:  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.

4. Income limits: The tax credit is subject to income limitations. Single buyers need a modified adjusted gross income of $75,000 or less to qualify for the full credit, that’s $150,000 for married couples. Those earning more than these thresholds may be eligible for reduced credits.

5. Refundable: Because the tax credit is “refundable,” qualified buyers can take advantage of it even if they don’t have much tax liability.

6. Recapture: Buyers have to own the home for at least three years in order to capitalize on the credit. If they sell the home before then, they will have to return the credit to the government. (Exceptions will be made in certain cases, such as death or divorce.)

Thanks to U.S. News for providing useful information regarding this topic.