We have been receiving a lot of questions from customers wanting to know more about the $8000 tax credit that was included with the Stimulus bill sometime back.  I figured to hopefully get rid of some of the confusion by posting the most common questions and answers.  If I have missed any questions please feel free to leave a comment and I will be happy to add to my post. 

Can I use the $8000 tax credit as my down payment?

As of now the answer is no.  Apparently there is some real confusion here because last week there was a mortgagee letter from HUD that said this would be allowed by FHAonly to have the letter taken down a few days later.  This would be a great thing to happen since the down payment is often the biggest hurdle for first time home buyers but as of today- this is not an option.  In order to do an FHA mortgageyou will need 3.5% of your own money (either savings or a gift) as a down payment. 

What happens if I purchase and then decide to move out and rent my property after 2 years?

Here is the catch- the property you have purchased must remain your primary residence for the next 36 months.  If that property no longer remains your primary then you will be subject to pay back the monies.  After 36 months you are free to do as you please.  Make sure that you have a plan in place to remain in the property- Uncle Sam doesn’t give away money for free often and you do not want to have to give it back. 

I bought a property in 2009 and I would like to amend my taxes so that I can tax advantage of the tax break this year- how do I do this?

Ladies and gentlemen- I am not a CPA or a tax preparer.  I am a branch manager for a mortgage company and I use this site to offer out information regarding FHA mortgages and topics regarding the mortgage and real estate industry.  I would recommend that you seek the advice of a certified professional who handles taxes on an everyday basis.  If you need to find one in your local area I would recommend that you Google one for your local area. 

What is the definition of First Time Home Buyer?

A first time home buyeris anyone (including your spouse) who has not owned a principal residence in the last 3 years ending on the date of purchase.  I brought up the part about your spouse because I have received multiple calls from people wanting to buy a home in there spouses name because they want to take advantage of the free money the government is giving away.  I cannot disagree with you for trying- I am a home owner already and I would love to get access to $8000 for buying a home but currently Uncle Sam is only giving away free money to first time home buyers and there is no way around it!

Are there any income restrictions regarding the tax credit?  Is it possible that I make too much money?

As I am sure there are not many of us who would venture to say that we make too much money- there is a cap to what you can make and still qualify for the $8000 tax credit.  The amount of the tax break gradually starts phase out for taxpayers whose adjusted gross income is above $75,000 individually and $150,000 for joint filers.  It is completely phased out when your adjusted gross income exceeds $90,000 for an individual and $170,000 for joint filers.  So the bottom line is that for you to enjoy the maximum benefit of the $8000 first time home buyer tax credit you must make less then $75,000. 

Can I buy a property from a family memeber and still get the credit?

Simply No.  The tax break specifically has rules in it to prevent people from trying to buy a house from a family member just to take advantage of the tax credit.  The IRS defines a family member as:

I am sure that there will be more questions that will come up as we receive calls on the tax credit daily.  Please feel free to ask your questions below and I will be happy to answer them as they come in.