Home Buyer Credit

First of all, you need to know what the law considers as a “first time home buyer”. First, it is important that you have not owned a principal residence in the last three years. If you did buy a home in the last three years but have been renting it since then, you will still be eligible for the $8000 first time home buyer tax credit. Take note that both a vacation house or a rental property is not considered as principal residence.

Also, you should not expect to really get exactly $8000. You will only be credited for 10% of the purchase price of the house you are planning to buy and $8000 would be the maximum credit anyone will be allowed to get.

There are also a lot of other things that will disqualify you from getting these home buyer tax credit.

For instance, if the house you are planning to buy is more than $800,000 then you will no be qualified. Moreover, the tax credit does not include properties that have been received as a gift, inherited from family, acquired from a relative. You also have to be 18 or above and not a dependent.

You must remember that you have to reside in your newly purchased house for three consecutive years. If you decide to sell or have the house rented during this period then you will have to payback the tax credit you got to the IRS.

It is important to know these things before you actually buy a new house. Make you sure you know what you are doing before you decide.