Minnesota Real Estate Investors Association, Inc.

The Scoop on the $8,000 First-Time Home Buyer Tax Credit


As part of President Obama’s American Recovery and Reinvestment Act the $8,000 First-Time Home Buyer Tax Credit gives first time buyers incentive to buy in an effort to increase demand and get a handle on the falling home prices. This provides investors with another means of getting buyers to buy, which is something we all should take advantage of. The details and requirements are fairly straight forward:

  • The buyer must not have owned a home in the past three years
  • The new house must become the buyer’s primary residence for 3 years, if not, then you must pay back the $8,000
  • This credit will only apply if the buyer buys between January 1, 2009 and November 30, 2009.

The 2009 Credit is a true, money in the pocket deal. Those that bought a home under the 2008 version, which was basically an interest free loan to be paid back over the course of 15 years) cannot claim the 2009 credit.

The income qualifications hinge on the Modified Adjusted Gross Income (MAGI)

Adjusted Gross Income is your total annual gross income less your standard deductions or if you itemize, then the deduction would be your total itemized deductions. Example, if you make $50,000 a year and you have $10,000 in itemized deduction then your AGI would be $40,000.

For single tax payers the breakdown is as followed in terms of MAGI:

  • Full Credit - x < $75,000
  • Partial Credit - $75,000 < x < $95,000 – Partial Credit
  • Not Eligible - $95,000 < x

Married Partners who file separately each having a MAGI <$75,000 are eligible for $4,000 each.

Filing jointly with a combined MAGI of $150,000 < x < $170,000 will be able to get a reduced credit.

When a buyer is looking to take advantage of the 2009 Tax Credit and meet the qualifications they have two options that they can take and in some cases it may be better to do one over the other:

Claim it for 2008 – If the buyer has already filed their 2008 return they can file a 1040x amendment and claim the credit after the purchase. This would be worthwhile if their MAGI fell in the range of getting a full credit and/or if they are expecting to be earning more in 2009 that would push them into partial credit territory.

Claim it for 2009 – The buyer can claim their credit on their 2009 tax return by using the 5405 form. If the buyer isn’t expecting to make as much this year, but made $75,000 < x in 2008 it would be worth considering waiting for the 2009 tax season.

Anyone selling homes should take measures to integrate this incentive into their marketing materials. It would be a savvy idea to incorporate the 2009 First Time Home Buyer Tax Credit into a special report, into your flyers, handouts, internet ads, pretty much anything across the board when it comes to pushing the sale of a property to an end buyer. Those who can do this the best will have an advantage over those who don’t in what will possibly end up becoming a lucrative but competitive field. As home prices fall to levels where renters, who didn’t have their credit ripped apart by the foreclosure wave, will fit these tax credit qualifications will be looking to move up, especially with a $8,000 sweetener.



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kansasfun@gmail.comThanks for taking the time to discuss this, I feel strongly about it and love learning more on this topic. If possible, as you gain expertise, would you mind updating your blog with more information? It is extremely helpful for me. Big thanks for the useful info i found on Mike Jacka | The Scoop on the $8,000 First-Time Home Buyer Tax Credit.

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courtney.walsh2009@gmail.comThe term tax credit describes two different concepts: * The first is a recognition of partial payment already made towards taxes due. * The second is a state benefit paid to workers through the tax system, which has the effect of increasing (rather than reducing) net income.

Pc Recycling8/13/2009

Awm-links@hotmail.co.ukWOW,if only we had the same incentive over here in the UK.I think the $8,000 First Time House Buyer Tax Credit is a fantastic idea i mean it gives you the chance to actually own your own home for a change instead of renting.Please send a message to our dopey government to act in the same manner it really is a life changing thing you have done here.

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Awm-links@hotmail.co.ukJust to reiterate on the above comments i couldnt agree more.

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kamal_java938@yahoo.comhaha � the one who is posting the comments :D

London Removals7/27/2009

Awm-links@hotmail.co.ukGreat post its very interesting in what you have to say about this subject and at the same time very true.It will definitely help buyers and sellers in today's current climate.

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beckwoodpress3@gmail.comThanks a lot. This detail information is really necessary for me as I am looking for buying a home. I did not know that those that bought a home under the 2008 version) cannot claim the 2009 credit. Really this post is going to help both the buyers and sellers.

Filing back taxes7/15/2009

zettebalignasay@gmail.comIs it the details and requirements are fairly straight forward and required such as the buyer must not have owned a home in the past three years, the new house must become the buyer’s primary residence for 3 years, if not, then you must pay back the $8,000 and this credit will only apply if the buyer buys between January 1, 2009 and November 30, 2009?

Robert Zuniga7/7/2009

robert@stpaulinvestmentdeals.comA quality review! As always Mike, you are on top of Real Estate News and the practical way to make it work for home buyers! Thanks!


seowebmaster5@yahoo.inThis is great news, and I’m glad to see you sharing it with your readers. A lack of down payment is keeping a lot of buyers on the sidelines right now. This should encourage many of them to enter the market. Low rates, low prices, and tax credits … what’s not to love about all that? Take care. ~Brandon

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