The federal government has recently begun a history making incentive to help first time home-buyers make real estate purchases.
If you qualify for the new tax credit, you can get $8000 toward the purchase of your home.
First, in order to qualify for the tax credit, you have to purchase and make closing on your home by December 1,2009.
If you have built a new house, you must be living in it by December 1, 2009.
Your home buying experience, must have taken place between February 1, 2009 (when the credit was first enacted) and December 1, 2009 (the scheduled end date for the credit) to qualify.
It is likely Congress will extend the end date, but you should not rely on that at present.
While the tax credit is stipulated for first time home-buyers, that categorization is not exact.
You will qualify as a first time home-buyer if you have not owned a home threes years prior to buying this one.
If, for instance, if you owned a home and sold it five years ago and have not owned a home since, you qualify as a first time home-buyer under this credit.
Don't count on getting the full $8000.
Under the tax credit, you will get $8000 as a maximum.
If 10% of the total cost of your home is less than $8000, you will receive that amount as opposed to $8000.
If you are single and earn $75,000 a year or more, you will get less than $8000, and if you are married and earning $150,000 in combined annual income or more, you will get less than $8000 back as well.
If you sell your home within three years of purchasing it under the tax credit, you will have to pay back whatever you received from the federal government.
This is a restriction applied to help keep real estate flippers from benefiting from the tax credit.
There was a similar credit in 2008, but it required that you pay the money back to the federal government over fifteen years.
The current tax credit requires no return of the money.
This is a refundable credit, meaning that if you owe the federal government nothing or less than $8000 at tax time, the entire refund of $8000 is refundable to you less what you owe.
So, if your total tax liability by April 15, 2010 is $2000, you will get $6000 back if you used the first time home-buyers tax credit for 2009.