Most don't qualify for $8k tax credit to buy home

By John Matarese

If you've been on the fence about buying a new home, the government's new $8,000 tax credit may help you make your decision.

The trouble is most home buyers don't qualify. Consumer reporter John Matarese shows us why so many people are left out.

With home prices now down sharply from their peak, it's a great time to buy if you have the money and feel relatively good about your job.

The American Recovery and Reinvestment Act provides an even greater incentive: $8,000 in free money. Why are so many people upset with this new perk?

Julie Seitz is unloading boxes in her new home. It should be a happy time for a first-time buyer, but it's not.

That's because she closed on her new house in December. "If I would have closed a few weeks later, I would have had an $8,000 credit on my taxes," she tells us.

Yes, she just missed out on the $8,000 gift from Uncle Sam. Instead, she qualified for last year's stimulus: a $7,500 loan she now has to pay back. If she would have closed on her house two weeks later, she would not have to pay it back.

That's just one catch with the home buying credit.

  • The $8k credit is available only from January 1 to December 1 2009.
  • You cannot have owned a house or condo in the past 3 years.
  • You must remain in the new home 3 years.
  • The credit phases out if you earn $75,000 ($150,000 couples).

Many buyers don't qualify, including Julie who asks why it can't be retroactive like unemployment benefits. "I'm livid, very upset, that it's not retroactive like other things in the stimulus package."

This is similar to cash back rebates on new cars. If you buy a car, and two weeks later the automaker announces a new $3,000 cash incentive, guess what? In most cases, you can't get it retroactively. So jump when you see a deal, and count your blessings, so you don't waste your money.