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7 Common Questions Regarding the First Time Buyer Tax Credit

Please check with your accountant or tax professional regarding definitive answers to the first-time buyer tax credit.  The following 7 questions should give you some guidance regarding qualification for the home buyer credit. You can refer to IRS form 5405 for complete detail.

Do you have questions about the $8,000 first time home buyer tax credit?  You are not alone. The following should provide you with some answers:

Who qualifies as a first-time home buyer?

You are considered a first-time buyer if:

How much is the first-time home buyer credit? Everyone seems to refer to $8,000, but I have heard a credit of $7,500

Does a Condominium or Town-home qualify for the credit?

Yes.  The definition of a primary-residence is broad enough to include a condo or townhome. In fact, other house types such as trailers, co-ops, or even a house boat can qualify.

What if I don’t ever reach a level where I pay income taxes? How will I receive the credit?

Even if you don’t owe taxes, you will receive the credit. You will receive in the form of a check from the IRS.

Are there any income restrictions?

For those with gross income above $75,000, or $150,000 for joint filers, the credit will phase out (sliding scale). When your adjusted gross income is $90,000 or $170,000 for joint filers, the credit is completely phased out.

Can I purchase from a relative just to receive the credit?

Related party transactions are excluded.  The IRS defines a related party as:

What IRS form is needed?

IRS Form 5405 should be filed with your Form 1040.  

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