Cribbin Realty on the $8000 First time Homebuyer Tax Credit

4/2/09

It's official. The American Recovery and Reinvestment Act of 2009 has authorized a tax credit of up to $8000 for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009 (eleven months).

The $8000 first-time homebuyer tax credit included in the stimulus plan will spur actiivity. True, a $7500 version has been available since July 2008, but under the original rule teh buyers had to pay the money back of the next 15 years. Now, with no repayment, the refundable credit becomes much more attractive, especially when combined with favorable home prices and interest rates.

QUESTION: What's the definition of a first-time homebuyer for the purpose of this law?

CRIBBIN REALTY'S ANSWER: The law defines a first-time homebuyer as a buyer who has not owned a principle residence during the three year period prior to the purchase (the date on the HUD 1 is the determining factor). For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.

Mike