How does the $8000 first time home buyer tax credit work for someone who didn't owe anything on taxes?

I am in the process of buying my first home, and I am wondering how the $8000 tax credit will help me if at all. I have never owed anything on my taxes, I have always got a refund. ...show more
Answer:

I'm also a first-time home-buyer and asked the same question to the guy running the class for first-timers in my area. Basically, if you don't owe in taxes, then the $8,000 tax credit will be paid to you over and above what you would normally receive for a refund. So if after doing your federal income taxes for 2009 you would normally receive a $1,500 refund, you would get the 8,000 on top of that for a total of $9,500! If you owed $1,500 in taxes, then that liability would be subtracted from your $8,000 tax credit with a result of you getting a refund for $6,500. There will be a seperate tax form to fill out in order to receive the $8,000, so make sure you keep an eye out for it for when it's time for you or your accountant to file for 2009.

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We're in the process of buying our first home and the way it was explained to us was you DO NOT get the full $8000 back at once. You will recieve a $1000 tax credit every year for 8 years, if you usually get a refund you would get your refund plus an extra $1000. This being said you must live in the same house for at least 8 years, unless there are unforeseen circumstances like leaving for the military etc. If you do not stay at the same house for the whole term you may be responsible for paying that money back. Good luck!

Yoyo

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