Title 26 — Internal Revenue CodeRelease 119-73
§36 First-time homebuyer credit
Title 26 › Subtitle Subtitle A— - Income Taxes › Chapter CHAPTER 1— - NORMAL TAXES AND SURTAXES › Subchapter Subchapter A— - Determination of Tax Liability › Part PART IV— - CREDITS AGAINST TAX › Subpart Subpart C— - Refundable Credits › § 36
Summary
Lets you claim a tax credit equal to 10% of the price when you buy your main home in the U.S. if you qualify as a first-time homebuyer. The credit is normally capped at $8,000 ($4,000 if married and filing separately). A special rule can lower those caps to $6,500 and $3,250 for certain prior owners who lived in the same home for 5 of the last 8 years. The credit phases out once your modified adjusted gross income is over $125,000 ($225,000 for joint filers): the credit is reduced in proportion to how much your income exceeds that threshold up to $20,000. The purchase price of the home must not exceed $800,000. You must be at least 18 (or have a spouse who is). “First-time” means you (and your spouse) did not own a main home in the 3 years before the purchase. Buying new construction counts when you first move in. Purchases from close relatives or certain transfers are excluded. You cannot take the credit if you are a nonresident alien, if you stop using the house as your main home or sell it before the end of the tax year, if someone else claims you as a dependent, or if you don’t attach the settlement statement to your tax return. The government can require reporting to verify eligibility. Part or all of the credit can be “recaptured” (added back to your tax) over a recapture period: normally 6 2/3% of the credit is added each year for 15 years starting the second year after purchase, and if you sell or stop using the home during that period you may have to include the remaining unrecaptured credit in tax for that year (limited to any gain on a sale to an unrelated buyer). Death, certain involuntary conversions, transfers incident to divorce, and special military/Foreign Service/intel duty rules can change recapture. For purchases after December 31, 2008 there are narrower recapture rules and you may elect to treat the purchase as if it were made December 31 of the prior year for some parts of the rules. The credit applies to homes purchased on or after April 9, 2008 and before May 1, 2010, with limited contract and extended-duty exceptions that extend those dates in specific cases.
Full Legal Text
Title 26, §36
Internal Revenue Code — Source: USLM XML via OLRC
(a)In the case of an individual who is a first-time homebuyer of a principal residence in the United States during a taxable year, there shall be allowed as a credit against the tax imposed by this subtitle for such taxable year an amount equal to 10 percent of the purchase price of the residence.
(b)(1)(A)Except as otherwise provided in this paragraph, the credit allowed under subsection (a) shall not exceed $8,000.
(B)In the case of a married individual filing a separate return, subparagraph (A) shall be applied by substituting “$4,000” for “$8,000”.
(C)If two or more individuals who are not married purchase a principal residence, the amount of the credit allowed under subsection (a) shall be allocated among such individuals in such manner as the Secretary may prescribe, except that the total amount of the credits allowed to all such individuals shall not exceed $8,000.
(D)In the case of a taxpayer to whom a credit under subsection (a) is allowed by reason of subsection (c)(6), subparagraphs (A), (B), and (C) shall be applied by substituting “$6,500” for “$8,000” and “$3,250” for “$4,000”.
(2)(A)The amount allowable as a credit under subsection (a) (determined without regard to this paragraph) for the taxable year shall be reduced (but not below zero) by the amount which bears the same ratio to the amount which is so allowable as—
(i)the excess (if any) of—
(I)the taxpayer’s modified adjusted gross income for such taxable year, over
(II)$125,000 ($225,000 in the case of a joint return), bears to
(ii)$20,000.
(B)For purposes of subparagraph (A), the term “modified adjusted gross income” means the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section 911, 931, or 933.
(3)No credit shall be allowed under subsection (a) for the purchase of any residence if the purchase price of such residence exceeds $800,000.
(4)No credit shall be allowed under subsection (a) with respect to the purchase of any residence unless the taxpayer has attained age 18 as of the date of such purchase. In the case of any taxpayer who is married (within the meaning of section 7703), the taxpayer shall be treated as meeting the age requirement of the preceding sentence if the taxpayer or the taxpayer’s spouse meets such age requirement.
(c)For purposes of this section—
(1)The term “first-time homebuyer” means any individual if such individual (and if married, such individual’s spouse) had no present ownership interest in a principal residence during the 3-year period ending on the date of the purchase of the principal residence to which this section applies.
(2)The term “principal residence” has the same meaning as when used in section 121.
(3)(A)The term “purchase” means any acquisition, but only if—
(i)the property is not acquired from a person related to the person acquiring such property (or, if married, such individual’s spouse), and
(ii)the basis of the property in the hands of the person acquiring such property is not determined—
(I)in whole or in part by reference to the adjusted basis of such property in the hands of the person from whom acquired, or
(II)under section 1014(a) (relating to property acquired from a decedent).
(B)A residence which is constructed by the taxpayer shall be treated as purchased by the taxpayer on the date the taxpayer first occupies such residence.
(4)The term “purchase price” means the adjusted basis of the principal residence on the date such residence is purchased.
(5)A person shall be treated as related to another person if the relationship between such persons would result in the disallowance of losses under section 267 or 707(b) (but, in applying section 267(b) and (c) for purposes of this section, paragraph (4) of section 267(c) shall be treated as providing that the family of an individual shall include only his spouse, ancestors, and lineal descendants).
(6)In the case of an individual (and, if married, such individual’s spouse) who has owned and used the same residence as such individual’s principal residence for any 5-consecutive-year period during the 8-year period ending on the date of the purchase of a subsequent principal residence, such individual shall be treated as a first-time homebuyer for purposes of this section with respect to the purchase of such subsequent residence.
(d)No credit under subsection (a) shall be allowed to any taxpayer for any taxable year with respect to the purchase of a residence if—
(1)the taxpayer is a nonresident alien,
(2)the taxpayer disposes of such residence (or such residence ceases to be the principal residence of the taxpayer (and, if married, the taxpayer’s spouse)) before the close of such taxable year,
(3)a deduction under section 151 with respect to such taxpayer is allowable to another taxpayer for such taxable year, or
(4)the taxpayer fails to attach to the return of tax for such taxable year a properly executed copy of the settlement statement used to complete such purchase.
(e)If the Secretary requires information reporting under section 6045 by a person described in subsection (e)(2) thereof to verify the eligibility of taxpayers for the credit allowable by this section, the exception provided by section 6045(e) shall not apply.
(f)(1)Except as otherwise provided in this subsection, if a credit under subsection (a) is allowed to a taxpayer, the tax imposed by this chapter shall be increased by 6⅔ percent of the amount of such credit for each taxable year in the recapture period.
(2)If a taxpayer disposes of the principal residence with respect to which a credit was allowed under subsection (a) (or such residence ceases to be the principal residence of the taxpayer (and, if married, the taxpayer’s spouse)) before the end of the recapture period—
(A)the tax imposed by this chapter for the taxable year of such disposition or cessation shall be increased by the excess of the amount of the credit allowed over the amounts of tax imposed by paragraph (1) for preceding taxable years, and
(B)paragraph (1) shall not apply with respect to such credit for such taxable year or any subsequent taxable year.
(3)In the case of the sale of the principal residence to a person who is not related to the taxpayer, the increase in tax determined under paragraph (2) shall not exceed the amount of gain (if any) on such sale. Solely for purposes of the preceding sentence, the adjusted basis of such residence shall be reduced by the amount of the credit allowed under subsection (a) to the extent not previously recaptured under paragraph (1).
(4)(A)Paragraphs (1) and (2) shall not apply to any taxable year ending after the date of the taxpayer’s death.
(B)Paragraph (2) shall not apply in the case of a residence which is compulsorily or involuntarily converted (within the meaning of section 1033(a)) if the taxpayer acquires a new principal residence during the 2-year period beginning on the date of the disposition or cessation referred to in paragraph (2). Paragraph (2) shall apply to such new principal residence during the recapture period in the same manner as if such new principal residence were the converted residence.
(C)In the case of a transfer of a residence to which section 1041(a) applies—
(i)paragraph (2) shall not apply to such transfer, and
(ii)in the case of taxable years ending after such transfer, paragraphs (1) and (2) shall apply to the transferee in the same manner as if such transferee were the transferor (and shall not apply to the transferor).
(D)In the case of any credit allowed with respect to the purchase of a principal residence after December 31, 2008—
(i)paragraph (1) shall not apply, and
(ii)paragraph (2) shall apply only if the disposition or cessation described in paragraph (2) with respect to such residence occurs during the 36-month period beginning on the date of the purchase of such residence by the taxpayer.
(E)(i)In the case of the disposition of a principal residence by an individual (or a cessation referred to in paragraph (2)) after December 31, 2008, in connection with Government orders received by such individual, or such individual’s spouse, for qualified official extended duty service—
(I)paragraph (2) and subsection (d)(2) shall not apply to such disposition (or cessation), and
(II)if such residence was acquired before January 1, 2009, paragraph (1) shall not apply to the taxable year in which such disposition (or cessation) occurs or any subsequent taxable year.
(ii)For purposes of this section, the term “qualified official extended duty service” means service on qualified official extended duty as—
(I)a member of the uniformed services,
(II)a member of the Foreign Service of the United States, or
(III)an employee of the intelligence community.
(iii)Any term used in this subparagraph which is also used in paragraph (9) of section 121(d) shall have the same meaning as when used in such paragraph.
(5)In the case of a credit allowed under subsection (a) with respect to a joint return, half of such credit shall be treated as having been allowed to each individual filing such return for purposes of this subsection.
(6)If the tax imposed by this chapter for the taxable year is increased under this subsection, the taxpayer shall, notwithstanding section 6012, be required to file a return with respect to the taxes imposed under this subtitle.
(7)For purposes of this subsection, the term “recapture period” means the 15 taxable years beginning with the second taxable year following the taxable year in which the purchase of the principal residence for which a credit is allowed under subsection (a) was made.
(g)In the case of a purchase of a principal residence after December 31, 2008, a taxpayer may elect to treat such purchase as made on December 31 of the calendar year preceding such purchase for purposes of this section (other than subsections (b)(4), (c), (f)(4)(D), and (h)).
(h)(1)This section shall only apply to a principal residence purchased by the taxpayer on or after April 9, 2008, and before May 1, 2010.
(2)In the case of any taxpayer who enters into a written binding contract before May 1, 2010, to close on the purchase of a principal residence before July 1, 2010, and who purchases such residence before October 1, 2010, paragraph (1) shall be applied by substituting “October 1, 2010” for “May 1, 2010”.
(3)In the case of any individual who serves on qualified official extended duty service (as defined in section 121(d)(9)(C)(i)) outside the United States for at least 90 days during the period beginning after December 31, 2008, and ending before May 1, 2010, and, if married, such individual’s spouse—
(A)paragraphs (1) and (2) shall each be applied by substituting “May 1, 2011” for “May 1, 2010”, and
(B)paragraph (2) shall be applied by substituting “July 1, 2011” for “July 1, 2010”, and for “October 1, 2010”.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
Prior Provisions
A prior section 36 was renumbered section 37 of this title. Another prior section 36, acts Aug. 16, 1954, ch. 736, 68A Stat. 15; Oct. 4, 1976, Pub. L. 94–455, title V, § 501(b)(2), title X, § 1011(c), title XIX, § 1901(b)(1)(A), 90 Stat. 1558, 1611, 1790, directed that credits provided by section 32 not be allowed if an individual elects under section 144 to take standard deduction, prior to repeal by Pub. L. 95–30, title I, §§ 101(d)(3), 106(a), May 23, 1977, 91 Stat. 133, 141, applicable to taxable years beginning after Dec. 31, 1976.
Amendments
2010—Subsec. (h)(2). Pub. L. 111–198, § 2(a), substituted “and who purchases such residence before
October 1, 2010, paragraph (1) shall be applied by substituting ‘
October 1, 2010’ ” for “paragraph (1) shall be applied by substituting ‘
July 1, 2010’ ”. Subsec. (h)(3)(B). Pub. L. 111–198, § 2(b), inserted “, and for ‘
October 1, 2010’ ” after “for ‘
July 1, 2010’ ”. 2009—Subsec. (b)(1)(A). Pub. L. 111–5, § 1006(b)(1), substituted “$8,000” for “$7,500”. Subsec. (b)(1)(B). Pub. L. 111–5, § 1006(b), substituted “$4,000” for “$3,750” and “$8,000” for “$7,500”. Subsec. (b)(1)(C). Pub. L. 111–5, § 1006(b)(1), substituted “$8,000” for “$7,500”. Subsec. (b)(1)(D). Pub. L. 111–92, § 11(c)(1), added subpar. (D). Subsec. (b)(2)(A)(i)(II). Pub. L. 111–92, § 11(c)(2), substituted “$125,000 ($225,000” for “$75,000 ($150,000”. Subsec. (b)(3). Pub. L. 111–92, § 11(d), added par. (3). Subsec. (b)(4). Pub. L. 111–92, § 12(a)(1), added par. (4). Subsec. (c)(3)(A)(i). Pub. L. 111–92, § 12(c), inserted “(or, if married, such individual’s spouse)” after “person acquiring such property”. Subsec. (c)(6). Pub. L. 111–92, § 11(b), added par. (6). Subsec. (d). Pub. L. 111–5, § 1006(d)(2), (e), redesignated pars. (3) and (4) as (1) and (2), respectively, and struck out former pars. (1) and (2) which read as follows: “(1) a credit under section 1400C (relating to first-time homebuyer in the District of Columbia) is allowable to the taxpayer (or the taxpayer’s spouse) for such taxable year or any prior taxable year, “(2) the residence is financed by the proceeds of a qualified mortgage issue the interest on which is exempt from tax under section 103,”. Subsec. (d)(3). Pub. L. 111–92, § 11(g), added par. (3). Subsec. (d)(4). Pub. L. 111–92, § 12(b), added par. (4). Subsec. (f)(4)(D). Pub. L. 111–92, § 11(a)(2), inserted “and 2010” after “2009” in heading and struck out “, and before
December 1, 2009” after “
December 31, 2008” in introductory provisions. Pub. L. 111–5, § 1006(c)(1), added subpar. (D). Subsec. (f)(4)(E). Pub. L. 111–92, § 11(e), added subpar. (E). Subsec. (g). Pub. L. 111–92, § 12(a)(2), inserted “(b)(4),” before “(c)”. Pub. L. 111–92, § 11(a)(3), amended subsec. (g) generally. Prior to amendment, text read as follows: “In the case of a purchase of a principal residence after
December 31, 2008, and before
December 1, 2009, a taxpayer may elect to treat such purchase as made on
December 31, 2008, for purposes of this section (other than subsections (c) and (f)(4)(D)).” Pub. L. 111–5, § 1006(a)(2), (c)(2), substituted “
December 1, 2009” for “
July 1, 2009” and “subsections (c) and (f)(4)(D)” for “subsection (c)”. Subsec. (h). Pub. L. 111–92, § 11(a)(1), substituted “
May 1, 2010” for “
December 1, 2009”, designated existing provisions as par. (1), inserted heading, and added par. (2). Pub. L. 111–5, § 1006(a)(1), substituted “
December 1, 2009” for “
July 1, 2009”. Subsec. (h)(3). Pub. L. 111–92, § 11(f), added par. (3).
Statutory Notes and Related Subsidiaries
Effective Date
of 2010 Amendment Pub. L. 111–198, § 2(c), July 2, 2010, 124 Stat. 1356, provided that: “The
Amendments
made by this section [amending this section] shall apply to residences purchased after June 30, 2010.”
Effective Date
of 2009 Amendment Pub. L. 111–92, § 11(j)(1)–(3), Nov. 6, 2009, 123 Stat. 2991, provided that: “(1) In general.—The
Amendments
made by subsections (b), (c), (d), and (g) [amending this section] shall apply to residences purchased after the date of the enactment of this Act [Nov. 6, 2009]. “(2) Extensions.—The
Amendments
made by subsections (a) [amending this section], (f) [amending this section], and (i) [amending section 1400C of this title] shall apply to residences purchased after
November 30, 2009. “(3) Waiver of recapture.—The amendment made by subsection (e) [amending this section] shall apply to dispositions and cessations after
December 31, 2008.” Pub. L. 111–92, § 12(e), Nov. 6, 2009, 123 Stat. 2992, provided that: “(1) In general.—Except as otherwise provided in this subsection, the
Amendments
made by this section [amending this section and section 6213 of this title] shall apply to purchases after the date of the enactment of this Act [Nov. 6, 2009]. “(2) Documentation requirement.—The
Amendments
made by subsection (b) [amending this section] shall apply to returns for taxable years ending after the date of the enactment of this Act [Nov. 6, 2009]. “(3) Treatment as mathematical and clerical errors.—The
Amendments
made by subsection (d) [amending section 6213 of this title] shall apply to returns for taxable years ending on or after April 9, 2008.” Pub. L. 111–5, div. B, title I, § 1006(f), Feb. 17, 2009, 123 Stat. 317, provided that: “The
Amendments
made by this section [amending this section and section 1400C of this title] shall apply to residences purchased after December 31, 2008.”
Effective Date
Section applicable to residences purchased on or after Apr. 9, 2008, in taxable years ending on or after such date, see section 3011(c) of Pub. L. 110–289, set out as an
Effective Date
of 2008 Amendment note under section 26 of this title.
Reference
Citations & Metadata
Citation
26 U.S.C. § 36
Title 26 — Internal Revenue Code
Last Updated
Apr 6, 2026
Release point: 119-73