If you are planning to buy a home in 2009 you can take advantage of the Housing stimulus bill which is a part of 2009 Obama's Economic Stimulus Package. This Housing Stimulus bill contains a $8000 refundable tax credit for First time home buyers. One of the main points to understand here is What is the defintiion of a First time Home Buyer? This post is in response to the 100+ comments i recieved on my earlier post on $8000 first time home buyer tax credit - details explained in which most of the comments were a result of a confusion - Do i qualify for this home buyer tax credit? Here are the key points.
- Definition of a First Time Home Buyer: A first time home buyer is one who has not purchased or owned a Principal residence in the past three years. A principal residence is home which you actually live in. It maybe a mobile home a condominium (or condo) or a house boat. As long as you have been residing in it, it is your principal residence. Thus if you have purchased or owned a house in the past but have rented it, then that was not your principal residence. You may still qualify for the $8000 first time home buyer stimulus. Rental property or Vacation homes do not disqualify you from claiming the 8000 home buyer tax credit. Even non Resident Aliens may qualify for this $8000 housing tax credit. However not that if you are married, then both you and your spouse must be first time home buyers. Read my posts on $8000 first time home buyer tax credit for married people and $8000 housing tax credit for joint purchases.
- Dates of Purchase: in order to qualify for the $8000 first time home buyer tax credit you must purchase your home between Jan 1 2009 and Dec 1 2009.
- Income Limits/ Income Caps: Not every who is a first time home buyer qualifies for the $8000 housing stimulus. Only first time home buyers with modified gross annual income of $75,000 get full benefit of this housing tax credit. The tax credit is gradually reduced for those with income between $75,000 to $95,000 and finally a home buyer gets no tax credit if his/her modified gross annual income is more than $95,000. For married taxpayers, the home buyer tax credit is gradually reduced to zero for modified gross annual income between $150,000 to $170,000.
- Building a house as opposed to buying a house: Yes, even if you are building a home on a land you qualify for the $8000 home buyer tax credit. The law treats this case as if you have purchased the home from the contractor.