iI the $8000 tax credit credit on your taxes or is it a check for $8000 cash?
The $8K tax credit will expire on Nov 30, 2009. The house that is purchased must have a final HUD 1 statement dated 11/30/2009.
The credit is 10% of the purchase price to a max of $8K; whichever is less.
You can either file for the credit on your 2009 tax returns or file an amended 2008 tax return using the form 5405.
Example: If you file for the tax credit amending your 2008 tax returns than you probably (talk to a tax professional) will get a check for whatever amount you qualify for. Bought a $200K home, tax credit is $2K; if you qualify than would probably get a check for $2K.
Example: file for the credit on your 2009 tax returns. If you purchase a house for $500,000, your credit is $5K but if you owe $5K on your taxes for 2009 than you would get zero.
Here is the link to the IRS website with the form and instructions on how to file for the credit before filing your 2009 tax returns. http://www.irs.gov/newsroom/article/0,,id=204671,00.html?portlet=7
Again I am not a tax professional I can give generalities on how the credit works but you need to consult with your own tax professional to see how it applies to your circumstances.
Examples of how the credit applies:
Buy a house for $200K 10% would be $20K however your would only get the $8k max.
Buy a house for $50K; 10% would be $5K that is the max credit you would get not to the $8K.
Also if you make greater than $75K for a single person you begin to phase out of the tax credit and at $95K you will not receive any credit.
For a married couple they begin to phase out of the tax credit at $150K.
The tax credit is in the Senate with hopes they will pass it soon to extend the credit. We hope that it will be extended for at least 6 mns as well as amended with higher income for those who can qualify.
Always check with your tax professional on how this credit applies to you.
The math is a little off on the initial answer.
10% of $200,000 is $20,000 so to get the full Tax Credit you would need to purchase a house that costs atleast $80,000 which would qualify for the full $8,000 Tax Credit.
I hope this helps to fully understand the Tax Credit offered by the current administration.