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More About New $8000 Tax Credit

Here is the short Q & A on it:

Q: How much is the credit?

A: The tax credit would be $8,000 or 10% of the purchase price, whichever is less. If you buy a property that costs 40K, the credit would be 4K. For any property over 80K, that credit would be 8K.

The tax credit directly decreases your federal income tax. If your tax liability for 2009 is 10K and you buy a house for 80K or more,you would only owe 2K in taxes.

Q: What type of purchase is eligible?

A: Similar to the $7,500 tax credit included in the Housing and Economic Recovery Act of 2008, the $8,000 tax credit included in the 2009 economic stimulus plan is available for the purchase of a principal residence by first-time homebuyers.

Q:Who qualifies for the first-time homebuyer credit?

A: According to the IRS, any taxpayer who has not owned a home during the 3 years prior to the date of purchase can qualify for the credit.

Q: And I really don't have to repay the credit?

A: No. This is a change from the previous $7,500 tax credit. However, if the home is sold within three years of purchase, the credit will be reversed.

Q:Are there income limitations on the tax credit?

A: The tax credit begins to phase out for individuals with adjusted gross income over $75,000 ($150,000 for joint filers).