If you’re viewing this page, you must be anxiously wondering whether you qualify for the first time home buyer credit, which can put 10% of the purchase price of your home (up to $8000) into your pocket. We will not disappoint, so grab a cup of coffee and follow along as we walk you through all the key requirements and gotchas.

The first and most fundamental requirement you must meet is to satisfy the definition of a “first time home buyer” as outlined in the current legislation. You meet this definition if you have not bought a home as a primary residence in the three years prior to your current purchase. This applies to both you and your spouse if you are married. Therefore, if you have not purchased a home as a primary residence in the last three years but your spouse has, then NEITHER of you qualifies!

A primary residence does not include vacation homes and rental properties; therefore if you own such a property you may still qualify for the credit. By the same token, you cannot claim the credit for a vacation home or rental property because they are not your primary residence. There are also no restrictions on the specific type of home (e.g. townhouses, condominiums, mobile/manufactured homes, etc) that can qualify as long as it is your primary residence and is affixed to a piece of land. You are not required to own the land, however; it may be leased. Unfortunately, an RV or recreational vehicle does not qualify for the credit because the law regards it as personal property. Additionally, you can qualify even if the home purchase is pursuant to finance agreement and the seller retains the title of the house until full payment is made.

Next, as we mentioned on our home page, you must purchase your home between January 1st, 2009 and April 30th, 2010. This is thanks to an extension signed by President Obama on November 6th, 2009. The previous deadline was December 1st, 2009 so this gives you a few more months to shop around, contact mortgage brokers, and apply for a first time home buyer loan. You technically have until June 30th, 2010 to close the sale but you must be in a binding agreement by April 30th, 2010. Don’t wait till the last day though!

You must also fall within certain income limits to qualify for the first time home buyer credit. If you purchased a home between January 1st, 2009 and November 6th, 2009 then you must not make more than $75,000 per year if filing as a single tax payer. If you are married and are filing jointly with your spouse, then you must not make over $150,000 per year year if you bought your home between January 1st, 2009 and November 6th, 2009. Thanks to some recent changes, the income limits have been raised for sales after November 6th, 2009. The income limit for single tax filers who purchase after this date is $125,000 per year and $225,000 per year for joint filers.

There are also some new benefits for members of the armed services, intelligence community, and Foreign Service serving overseas. If you are in any of these groups, you have an additional year to buy a principal residence in the US and qualify for the credit. This means you have until April 30th, 2011 to enter into a binding agreement to purchase your new home and until June 30th, 2011 to close on the purchase.

Having covered some of the basics, let’s now go over some situations that could either preclude you from receiving the credit or force you to repay it. The key thing you must keep in mind is that if the house you purchase ceases to be your primary residence, you are required to repay the credit. Selling your home within the first three years following your purchase a prime example. Sorry, house flippers! Exceptions may be made for members of the armed services, intelligence community, and Foreign Service. If the home you purchase ceases to be your primary residence after December 31st, 2008 due to government orders for extended duty service, the repayment requirement is often waived. Your place of duty must be at least 50 miles away from you principal residence and the period of duty must exceed 90 days.

Additionally, if ANY of the following apply to you, then you do NOT qualify for the credit:

* You bought your home from a close family member such as parent, child, grandchild, or spouse.
* You live in the District of Columbia and claimed the Washington D.C. first time home buyer credit.
* You are a non-resident alien.
* Your home is financed using tax-exempt mortgage revenue bonds (except homes purchased in 2009).
* You do not meet the definition of a first time home buyer or exceed the allowable income limits as described above.

If you bought your home after November 6th, 2009 there are some additional restrictions that apply:

* You must be at least 18 years old to qualify for the credit. For married couples, however, this applies only to one spouse.
* If the purchase price price of your home exceeds $800,000, then you do NOT qualify for the credit.
* Dependents cannot claim the tax credit.
* You must attach a property executed settlment statement with your tax return.
* The IRS can now deny your credit without first having to audit your return. This is also known as “math error authority” and unfortunately it is retroactive. This means that the IRS can exercise this authority on original and amended 2008 returns and claims not yet filed.

This concludes our summary of the key requirements you must meet to qualify for the first time home buyer credit. As with anything, the devil lies in the details and there are other nuances that you may have to contend with. The law also tends to change from time to time so make sure you keep visiting us for all the latest developments.