Who Qualifies as a First Time Home Buyer?

home buyer tax credit

Real Estate Q&A: “Who qualifies as a first time home buyer?”

With all the fuss about the first-time home buyer tax credit, you’re probably wondering if you’re eligible.

Well, the tax credit can only be used towards the purchase of a primary residence, meaning a home you actually intend to live in full time, no vacation homes or investment properties.

Additionally, you (and your spouse if applicable) must not have owned a principal residence in the three years prior to purchase to qualify.

If you meet these requirements, you can take advantage of the first-time home buyer tax credit, which just got extended from November 30 to April 30, 2010.

The tax credit can be as high as $8,000, but may not exceed 10 percent of the purchase price of the property.

You’re entitled to receive the full tax credit if you’re income is $125,000 or less for single tax filers, and $225,000 for joint tax filers.

That’s up from $75,000 and $150,000, respectively; the extension of the tax credit has also been accompanied with a “move-up tax credit,” so even if you don’t qualify as a first-time home buyer, you can take advantage.

To qualify for the move-up tax credit, you need to have used your current property as a primary residence for five of the past eight years.

Of course, the move-up credit seems like a bit of a waste, because who in their right mind would sell right now with prices in the dumps and buy a new property given the tight lending environment and uncertainty?

Seems like a bit of a stretch by the interested parties (real estate agents, home builders, etc.).