The deadline is fast approaching to take advantage of the 2009 first time home buyer tax credit, so I am getting more and more questions about it. I thought I would take a second to explain some basic principles. Of course, if you have more questions, consult your lender or tax adviser, but here goes...
The credit is available to first time buyers who purchase on or before November 30, 2009. "Purchase" is defined as when closing occurs and title transfers. A first time buyer is defined as someone who has not owned a principal residence during the 3 years prior to the purchase. For a married couple to qualify, both people must meet this condition. It is not automatically $8000 for everyone -- the credit is equal to 10% of the home's purchase price up to $8000. Income limits do apply, and unlike the tax credit enacted in July 2008, this one does not have to be repaid. However, buyers must use the home as a principal residence for at least 3 years or face recapture of the credit amount.
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