Housing Tax Credit Frequently Asked Questions

On February 17, 2009 President Obama signed the American Recovery and Reinvestment Act of 2009 into law.

The law authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009. 

Who is eligible to claim the tax credit?  First-time home buyers purchasing a principal residence-either new or resale are eligible for a tax credit of up to $8,000.  To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and before December 1, 2009.  For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner.  The tax credit will be administered through the Internal Revenue Service (IRS).

What is the definition of a first-time home buyer?  The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase.  For married taxpayers, the law reviews the homeownership history of both the home buyer and his/her spouse.

Does this tax credit apply to modular homes?  Any home that will be used as a principal residence will qualify for the credit including modular homes.

What does it mean that the credit is "refundable"?  The home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. 

PLEASE NOTE:  This is guidance only, and you should contact a professional tax consultant for a fuller explanation of any particular provision.