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How does the first time home buyer tax credit REALLY work?

The frequently asked question about the new federal tax credit for first time home buyers is “does it have to be repaid”? The answer isn’t exactly a cut and dry and yes or no. 

What the government has defined as a first time home buyer is misleading in my opinion. It’s actually a big bonus because it really isn’t just for first time homebuyers.

What is the definition of a first-time home buyer?
The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase.

For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit.

Find out details of NEW Tax Credit updated as of Feb. 2009

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Written by Rae Catanese, Realtor

Licensed Realtor since 2002, Tampa Bay’s own Rae Catanese regularly gives expert advice and insider tips about the Tampa Bay real estate market via her blog, The Tampa Real Estate Insider. If you are thinking of buying or selling a home in the Tampa, St. Petersburg or Clearwater areas-then this blog is for you. I typically post articles once a week. To make sure you don’t miss my newest posts, you can subscribe here! Have a real estate question? Email me here!

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