Start house-hunting now to qualify for tax credit for first-time home buyers

First-time homebuyers—those who have not owned a home for at least three years—may be eligible for the
$8,000 federal tax credit, but the window of opportunity is closing rapidly. To qualify for the credit, the buyer
must close escrow by midnight on Nov. 30, when the tax credit expires. Buyers hoping to take advantage of
this benefit are advised to start house-hunting early, as the buying and lending processes takes time.

Finding the right house can take some time, so REALTORS® recommend home buyers start
looking for a home as soon as they are able and ready to purchase. Buyers also should build in
extra time to accommodate the lending process, which is taking approximately two weeks longer to
process this year compared with last year.
• The tax credit is equal to 10 percent of the purchase price, up to $8,000, subject to income limits.
Single taxpayers are eligible if their modified adjusted gross income is $75,000 or less, while
married taxpayers filing jointly must have a modified adjusted gross income of $150,000 or less.
• Only primary residences are eligible for the federal tax credit, including new or existing single-family
homes, townhouses, condominiums, manufactured homes, custom homes, and houseboats.
Vacation homes and investment properties do not qualify.
Purchases must be arm’s-length transactions, meaning the seller cannot be the buyer’s parent,
grandparent, child, grandchild or spouse.
• Married people filing as such cannot claim the credit if either spouse has owned a primary
residence within the last three years. However, unmarried joint purchasers may allocate the credit
in any way they see fit, as long as it does not exceed the $8,000 maximum.
• The government will allow those who finance their purchases with a federally insured loan to apply
their anticipated credit immediately toward closing costs or as additional down payment, rather than
waiting until they file their 2009 taxes to receive the refund.