Home Buyer Credit

Who are considered “first-time” home buyers?
As defined by law, a “first-time home buyer” is someone who hasn’t had owned a primary residence the preceding three years of purchase. Married taxpayers are checked by law regarding their ownership history, both of them individually. If you’re married and haven’t owned a home for the past three years, but your husband or wife has, then neither of you is qualified for the first-time home buyer credit.

However, if you’re unmarried but have joint purchases, the credit amount could be allocated to either of you who qualifies for the first-time home buyer credit. This also applies to a parent jointly purchasing a home with a son or daughter. But keep in mind that a vacation home or a rental property don’t count as a primary residence, so these don’t disqualify you for the first-time home buyer credit.

Are there any income limits for claiming the tax credit?
Yes, there is. The income limit for single taxpayers is $75,000. And for married taxpayers, the limit is $150,000.

How do I claim the tax credit?
You can easily claim the tax credit on your federal income tax return. There are no other application forms required to fill out, and no pre-approval necessary. But to save you your effort, make sure first that you do qualify as a first-time home buyers.

When must I pay back the credit?
The payment should start on the second year after you have claimed the credit. For example you claimed for the credit in you 2009 federal tax return, you should start your payment, including one-fifteenth of the total amount of credit you claimed as  additional tax, on your 2011 federal tax return.

How is the credit repaid?
The first-time home buyer credit is like a fifteen-year, interest-free loan. The credit will be paid in 15 equal annual installments through your federal tax return.