We have had many people ask us about the home buyer tax credit that is soon to expire. This tax credit is not only good for first time home buyers, but sellers as well since there is an added incentive for home owners wanting to move to their next home. Below we have outlined this tax credit in more detail…
Homebuyer Tax Credit
This tax credit is open to buyers who have a signed purchase contract by April 30, 2010 and the home closes on or before June 30, 2010.
Most buyers are eligible
First-time homebuyers are eligible for a credit of 10 percent of the price of the home, up to $8,000. A first-time home buyer is someone who hasn’t owned a principal home in the U.S. in the last three years.
Buyers who have owned a home at some period during the last three years and used it as their principal residence for five consecutive years in the last eight can receive up to $6,500.
No Repayment if You Stay in Home for Three Years
The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount of the credit will be recouped on the sale.
Caps on Income, Home Price
Individuals who earn up to $125,000, and couples who earn up to $225,000, are eligible for the full credit. Individuals who earn between $125,000 and $145,000 – and couples who earn between $225,000 and $245,000 – can receive a percentage of the full credit.
The maximum purchase price is $800,000. Any home selling for more than that makes the buyer ineligible for the credit.
Taking Advantage of the Credit
You can claim the credit on your 2009 or 2010 tax return. There are also programs in place to enable you to use the funds to help with the down payment.
Applying the Credit to Your 2009 Taxes
• You will need to do three things to claim the credit on your 2009 tax return:
• Fill out the applicable IRS form to determine the amount of your available credit.
• Apply the credit when you file your 2009 tax return or an amended return.
• Attach documentation of purchase to your return or amended return.
If You Purchase in 2010
Buyers purchasing in 2010 will have the option to:
• Claim the credit on their 2009 return, even if the purchase is completed after December 31, 2009.
• File an amended return for 2009 if their purchase is completed after April 15, 2010.
• Claim the credit on their 2010 tax return.