$8,000 Home Buyer Tax Credit

I find it interesting that many Realtors and builders I talk with lately either don’t understand the $8,000 Home Buyer Tax Credit, or they think the money is a tax deduction. If people in the real estate/construction industry don’t understand this program, described by my company owner as the best thing to happen to home buying since the inception of FHA and VA financing, then how can John Doe Home Buyer understand what the tax credit means?

Here’s a simple breakdown of how the $8,000 tax credit, not tax deduction, works:

Buy any home this year and close by November 30, 2009, and the Internal Revenue Service will give you a tax credit of up to $8,000 on your 2009 taxes. For example, if you owe the IRS $3,000 for 2009 taxes and you’re eligible for the $8,000 credit, you would be refunded $5,000. If you owe nothing on your 2009 return, you would receive the entire amount of $8,000. If you’re already getting money back from your tax return, the $8,000 is added to that refund.

  • A first-time buyer is defined as someone who has not owned a home during the last three years.
  • The home must be used as your primary residence.
  • The credit is based on 10 percent of the sales price, not to exceed $8,000.
  • There may be a recapture clause if you sell your home within the first three years of ownership.
  • Income limits may reduce the amount of credit you receive.

Remember that the $8,000 does not have to be repaid, and you are free to use the money for whatever you’d like. Financially savvy home owners may use it to pay down their mortgage principal; home owners who have a flair for decorating may use the funds for new furniture. Others who need to escape the stress of getting a mortgage and purchasing a home may take the funds to sunny Mexico for a relaxing get-away. The sky, and your imagination, are the limit when it comes to spending the money.

For more information, check out a website from The National Association of Home Builders.

For new home information in Oklahoma, visit our website.