Home > Home Buying > FAQs of Frisco TX First Time Home Buyer Tax Credit $8,000

These are some of the questions I have been asked too often. I want to take the opportunity to clarify some of the Frequently Asked Questions about the First Time Home Buyer Tax Credit.

Is it FOR REAL that the government will give me $8,000 for buying my first home?

Yes and no. There will not be an $8,000 check coming your way when you purchase that first home. It is not like a rebate check that you receive from a product/ service you. However, you may qualify for up to the $8,000 tax credit when you file for your 2009 Income Tax.

Do I have to wait for the check to come in the mail (after I file my 2009 Income Tax on April 15 2010)?

No. You can file for an amended tax return if you had filed for your 2008 Income Tax. You will use the 1040X form to do that. Please consult a tax professional about this.

I heard that I can use this $8,000 as part of my down payment. Is that true?

If you plan to obtain financing through FHA, you will still require a 3.5% (minimum down payment) of your own funds. You may use the $8,000 as down payment after you have met the minimum down payment required from our own funds. You can use the $8,000 towards your closing costs and interest rate buy down.

What is really involved with using the $8,000 tax credit as down payment over the minimum required from my own funds, or using it towards closing costs or interest rate buy down?

Essentially, you will be taking a "bridge" loan from state-approved Housing Finance Agencies HFA. The $8,000 will not be coming from the IRS directly. You will still have to apply and qualify for the bridge loan. This loan may or may not be interest-free. You will have to check with the individual HFA lender. The other option is to obtain a bridge loan from a non-profit organization.

Is there an alternative to a bridge loan?

Yes, file for an amended 2008 Income Tax return. Your check may come in a few weeks after you file your amended taxes.

Who can qualify for this first time home buyer tax credit?

Any individual who has not owned a home in the past 3 years. If a married couple file jointly on their tax returns, both individuals must meet this criteria.

Must I live in the house I claim the tax credit on?

Yes. This property must be your primary residence.

Is this a flat $8,000 tax credit?

No. The maximum tax credit is $8,000 ie. 10% of $80,000 purchase price. If your first time home is less than $80,000, you will be able to take 10% of its purchase price.

Is there an income restrictions?

Full credit is available for individuals with an adjusted gross income no more than $75,000 and married couples of $150,000. Phase-out for caps at $95,000 and $170,000.

When do I have to purchase my house in order to receive this $8,000 tax credit?

Purchases must close by November 30 2009. If you build your home, the closing MUST occur by November 30 2009.

Will they extend this tax credit?

At the time of this publication, there had been discussions about an extension. Stay tune for more information soon.

Is this a true tax credit?

Yes, this is a true tax credit. A tax credit is direct tax reduction. If you do not owe any taxes, you will receive a full $8,000 check in the mail. If you owe $5,000 in tax but qualify for the $8,000 tax credit, you will receive a $3,000 check in the mail. If you owe $10,000 and qualify for $8,000 tax credit, you will only owe $2,000 at the end of the day.

If I am not a US citizen, can I still qualify for the $8,000 tax credit?

Maybe. If you qualify as a NonResident Alien as defined by the IRS, and you meet the rest of the criterias, you will be eligible for the tax credit. Read more about NonResident Alien status in the IRS Publication 15.

I'm confused between the $7,500 and $8,000 tax credit.

The $7,500 tax credit is an interest-free loan, paid back in your taxes for the next 15 years. Thus, the $8,000 tax credit will be a better option for you to take should you qualify. The biggest difference is that the $8,000 tax credit does not need to be re-paid back if you live in the house for 3 years or more. In order to qualif for the $7,500 tax credit, you must have purchased your home on or after April 9 2008. If you purchased your home on or after January 1 2009, you want to take the $8,000 tax credit because it does not need to be re-paid.

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