I'm a First-Time Homebuyer in Minnesota. Do I Qualify for the Tax Credit?

Who is eligible to claim the home buyer tax credit?
First-time home buyers purchasing a home may be eligible for the tax credit. To qualify for the tax credit, a home purchase must close on or after January 01, 2009 and before December 01, 2009. The purchase date is the day when closing of escrow occurs.

What is the definition of a first-time home buyer?
The new law defines “first-time home buyer” as a buyer who hasn’t owned a home used as a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the ownership history of both the home buyer and the spouse of the homebuyer.

For example, if you haven’t 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. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Owning vacation home in MN and rental property not used as a principal residence will not disqualify a buyer as a first-time home buyer.

How is the amount of the tax credit determined?
The tax credit is equal to ten percent of the home’s purchase price up to a maximum of $8,000. For example, a $60,000 purchase in Minnesota qualifies for $6,000.

What are the income limits for claiming the tax credit?
The U.S. and MN tax credit amount is reduced for buyers with an adjusted gross income of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing jointly. The tax credit amount is reduced to zero for taxpayers with AGI of more than $95,000 (single) or $170,000 (married) and is less for taxpayers with AGIs in between these amounts.