What is the Homebuyer tax credit?
The law provides a tax credit for First time homebuyers equal to ten percent of the qualified home purchase price. The credit is capped at $8,000.
The newly-enacted tax credit provides eligible home buyers who have lived in their current home consecutively for five of the previous eight years with up to $6,500 in tax credits.
Who is eligible for the First-time homebuyer tax credit?
• First-time home buyers, defined as a buyer who has not owned a principal residence in the previous 3 years
• U.S. citizens who file tax returns
• Eligible properties include any single family home that will be used as a principal residence including condos, co-ops and townhouses
• To qualify, buyers must have an accepted contract on the sale of the home before the end of business on Friday April 30th, 2010 and close by June 30th, 2010.
Who is eligible for the Move-up homebuyer tax credit?
• Current home owners purchasing a home between November 7th, 2009 and April 30th, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.
• U.S. citizens who file tax returns
• Eligible properties include any single family home that will be used as a principal residence including condos, co-ops and townhouses that are purchased for $800,000 or less
• To qualify, buyers must have an accepted contract by on the sale of the home before the end of business on April 30th, 2010 and close by June 30th, 2010
* The full $8,000 credit is available for individuals with modified adjusted gross income (per IRS definition) of no more than
$125,000 ($225,000 for couples filing jointly)
* A partial credit is available for individuals with modified adjusted gross income between $75,000 and $95,000 (between $150,000 and $170,000 for couples filing jointly) for Purchases on or before Nov 6th 2009
When will you receive the tax credit?
The credit reduces the income tax liability for the year of purchase. Therefore to receive the credit for your income taxes filed by April 15th, 2010 for homes purchased in 2009 or April 15th, 2011 for homes purchased in 2010, you need to have an accepted contract by close of business April 30th, 2010 and close by June 30th, 2010. The credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayers a refund check.
Payback Provisions
* Homebuyers claiming a $8,000 credit will not have to repay the credit for any home purchase on or after January 1, 2009 and before June 30th, 2010
* Homebuyers claiming a $6,500 credit will not have to repay the credit for any home purchase on or after Nov 7th, 2009 and before June 30th, 2010
* If the home is sold within three years of purchase, entire amount of credit is recaptured on sale. Applies only to homes purchased in January 2009 to June 30th, 2010.
1 Consult a tax advisor regarding your individual situation. This information is not intended to provide legal advice, tax advice, accounting services, or investment advice, nor should it be relied on for legal advice. Please seek the advice of your own legal counsel.
2 Not available for those who qualify for a similar tax credit in the District of Columbia, or for those who finance their home purchase under a mortgage revenue bond program. |
