THE REVISED HOME BUYER TAX CREDIT
WHO CAN CLAIM THE CREDIT
First time home buyers who purchase homes between November 7, 2009 and April 30, 2010 are eligible for the credit. To qualify as a “first-time home buyer,” the purchased or his/her spouse may not have owned a resident during the three years prior to the purchase.
For current homeowners purchasing a home during the same time frame, they are also eligible for a tax credit, so long as the home being sold or vacated was their principal residence for five consecutive years within the last either. To elaborate, it must be the same home; it is not enough that they have been homeowners for five consecutive years; they must have been in the same home for five consecutive years.
Another key point is that the existing home does not need to be sold. One must, however, occupy the new home as a principal residence and do so for three years or risk recapture of the credit. Also, the new home does not need to cost more than the old home despite the concept that it is directed at “move-up” buyers.
HOW MUCH IS THE CREDIT AND WHAT ARE THE INCOME LIMITS?
The maximum allowable credit for first-time buyers is $8,000 or 10% of the sales price, whichever is less. For current homeowners, it is $6,500 or 10% of the sales price, whichever is less. Under the extended home buyer tax credit, single buyers with income up to %125,000 and married couples with incomes up to $225,000 may receive the maximum credit.
The credit decreases for single buyers who earn between %125,000 and $145,000 and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Homebuyers earning more than the maximum qualifying income – over $145,000 for singles and over $245,000 for couples – are not eligible for the credit.
WHAT ARE THE DEADLINES FOR QUALIFYING FOR THE CREDIT?
Under the extended home buyer tax credit, as long as a written binding contract to purchase a home is in effect on April 30, 2010, and the deal is closed by July 1, 2010, one can claim the credit.
ARE THERE ANY OTHER CRITICAL PROVISIONS?
There are three provisions people should be aware of”
• There is an $800,000 limitation on the cost of the home.
• The purchaser must be at least 18 years old on the date of the purchase.
• For a married couple, only one spouse must meet this age requirement and dependants are not eligible to claim the credit.
*Note- Always check with your own legal/financial advisor prior to making any decision based on this credit, as rules and qualifying guidelines are subject to change.
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How do I claim the tax credit? Do I need to complete a form or application? Are there documentation requirements??? This is something I want to do!
San Diego Real Estate Agent
San Diego, you can claim the tax credit on your federal income tax return. Well you should complete IRS Form 5405 to determine their tax credit amount, and THEN claim this on your income tax form for 2009 return. Please note that although the Form is titled “First-Time Homebuyer Credit,” this is the correct form for claiming BOTH the $8,000 first-time homebuyer tax credit and $6,500 repeat buyer tax credit.
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