First-Time Buyer and Repeat Buyer Tax Credit Information
What is the definition of a Repeat Home Buyer?Repeat home buyers are defined by law as buyers who have owned their current or most recent principal residence for 5 consecutive years out of the 8 years prior to the purchase date. not owned a principal residence during the three-year period prior to the purchase of the home. For married couples, the test must be met by both buyers. If one spouse owned a principal residence for less than five consecutive years, neither spouse is eligible for the tax credit. How is the tax credit calculated?For first-time buyers, the tax credit is equal to 10 percent of the purchase price of the home up to a maximum tax credit of $8,000. For repeat buyers, the tax credit is equal to 10 percent of the purchase price of the home up to a maximum tax credit of $6,500. Is there a deadline to buy my home?To qualify for the tax credit, a home purchase must on or before April 30, 2010. If you have a valid purchase contract signed by April 30, 2010 the deadline is extended to June 30, 2010. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner. The purchase date is not the date when your purchase contract is accepted. Which type of home can I purchase?Any kind of home is eligible for the tax credit including existing homes, new homes, condos and townhomes.The home must be your principal residence, vacation homes and investment property are not eligible. If you owned a home more than three years ago, you still qualify as a first-time buyer.Yes. As long as you have not owned a principal residence in the last three years, you qualify as a first-time buyer. What are the income limits for claiming the tax credit?For purchases after November 6, 2009 the income limit for the tax credit changed as follows. Taxpayers with modified adjusted gross incomes less than $125,000 for single taxpayers and less than $225,000 for married taxpayers qualify for the full tax credit. Taxpayers with modified adjusted gross incomes between $125,000 and $145,000 for single taxpayers and between $225,000 and $245,000 for married taxpayers qualify for a partial tax credit. Taxpayers with modified adjusted gross incomes over $145,000 for single taxpayers and $245,000 for married taxpayers do not qualify for the tax credit. Do I need to own the home for a certain period of time?Yes, home buyers who receive the tax credit must use the home as a principal residence for at least three years or face recapture of the tax credit amount. Certain exceptions apply. How do I claim the tax credit?You claim the tax credit on your federal income tax return by completing IRS Form 5450 and including a copy of your HUD-1 settlement statement with your taxes. IRS Form 5405 can be found at www.irs.gov. Can I claim the tax credit if I owe money to the IRS?Possibly. The tax credit is refundable so if you owe the IRS $2,000 and you qualify for the full $8,000 tax credit, the tax credit is first applied to your tax liability and you would receive a $6,000 check for the difference. How is a tax credit different from a tax deduction?This is an important distinction. A tax deduction is subtracted from your income to reduce the amount is income that is subject to taxation. A tax credit is applied after your taxes are calculated. If you expect a $1,000 tax refund and qualify for the full $8,000 tax credit, you would receive a check for $9,000. Can I buy a home in 2010 and apply for the tax credit on my 2009 tax return?Yes. The law allows taxpayers to treat a qualified home purchases in 2010 as if the purchase occurred on December 31, 2009. Taxpayers buying a home who wish to claim it on their 2009 tax return, but who have already submitted their 2009 return to the IRS, may file an amended 2009 return claiming the tax credit. You should consult with a tax professional to determine how to arrange this. How do I start the process of buying my first home?Your first step is to meet with one of our mortgage professionals to determine how much you want to spend and how much you will qualify for. After you receive your pre-approval, you can begin the process of working with your real estate agent to find your new home.
|
|
|
||||
|
||||||
