Q & A First Time Homebuyer’s $8000 Tax Credit

Q. I owned a home, sold it 5 years ago and have been renting since. Do I qualify for the credit?

A. Yes, you do. The IRS defines a first time homebuyer as someone who has not owned another principal residence in the past three years prior to the date of purchase.

Q. If I purchase a home for $50,000 do I qualify for the full credit?

A. The credit is for 10% of purchase price with a cap of $8,000. If you purchased a home for $50,000 then your credit would be $5,000.

Q. I am building a home and have a signed purchase contract. The home will not be completed until August, do I qualify?

A.  No. For new construction the purchase date is considered the date you first occupy the home.

Q. I own a home in another state that has been utilized as a rental for 4 years. Can I purchase a home and still be eligible for the credit?

A. Yes. The guidelines state you cannot have owned a property that you occupied as your principal residence. Since you have not lived in this home for longer than 3 years and converted it to a rental you would be eligible.

Q. I am purchasing a duplex. One side I will occupy as my primary residence and the other will be rented out. Will this qualify for the full credit?

A.  Yes, this scenario will qualify however, you cannot use the full purchase price to claim the credit, and you will need to allocate the amount between the two dwelling units.

Q. I want to purchase my grandparents home from them and use it as my primary residence. Can I use the first time homebuyer’s credit?

A. No, the purchase of a home cannot be from a close relative such as a spouse, parent, child or grandparent.

Additional information may be found at www. irs.gov.