Do I Qualify for the $8000 Tax Credit?
*The first time homebuyer's tax credit of up to $8000 has been extended. Eligible taxpayers can claim the credit as long as they purchase a home or are in contract for a home by April 30, 2010. Buyers in contract must close by June 30, 2010.
In addition, the government is giving those buyers who wish to downsize or move up by purchasing a new house an opportunity to receive up to $6500 in a tax credit. Certain criteria is required in order to qualify so you may want to consult your tax preparer.
The information below is being allowed to stand in order to answer any questions regarding the first time homebuyers tax credit of 2009.
frequently asked questions.......
1. Who is eligible to claim the tax credit?
First time home buyers purchasing a house, new or existing, are eligible for this tax credit. To qualify for the tax credit, the purchase must occur on or after January 1, 2009, and before December 1, 2009.* The purchase date is the actual date when the closing takes place and the property transfers to the new home owner.
2. What is the definition of a first time home buyer?
The law defines a first time home buyer as a buyer who has not owned a principal residence during the three years prior to the actual purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.
3. How is the amount of the tax credit determined?
The tax credit is equal to 10% of the home's purchase price up to a maximum amount of $8000.
4. Are there any income limits for claiming the tax credit?
There are income limits associated with the tax credit. For a single taxpayer purchasing a first home the limit is $75,000 annually. The limit is $150,000 for married taxpayers filing a joint return. For a single taxpayer with income above $75,000 and $150,000 for a married couple filing a joint return the tax credit is reduced. No credit is allowed for a single person at an income of $95,000 and $170,000 for a married couple filing jointly. Your accountant will be able to determine your precise tax credit.
5. What is the difference between this tax credit and the tax credit enacted by Congress in July 2008?
The major difference is that the tax credit effective after January 1, 2009, does not have to be repaid. This tax credit is a true tax credit. However, the home buyer must live in the house for at least 3 years to receive this benefit, otherwise, there will be a recapture of the tax credit amount.
6. How do I obtain the tax credit?
You will claim the tax credit on your federal income tax return. Home buyers will complete IRS Form 5405 to determine their tax credit amount then claim it on line 69 of their 1040 income tax return.
7. What kinds of homes will qualify for this tax credit?
There are many types of homes that will qualify. The list includes single family houses, 2 to 4 family properties, condominiums, manufactured homes also known as mobile homes, and even houseboats! Any home that will be used as a principal residence will qualify for the tax credit. This definition of a principal residence is identical to the one used to determine whether you may qualify for the $250,000 to $500,000 capital gain tax exclusion for principal residences.
8. Can I have a house built and still get the tax credit?
Yes you can. For the purposes of the home buyer tax credit, a principal residence constructed by a homeowner is treated by the tax code as having been 'purchased' on the date the home owner first occupies the house. Therefore, the date of first occupancy must be on or after January 1, 2009, and before December 1, 2009.*
However, a newly constructed home bought from a home builder is eligible for the tax credit upon the date of the closing and title passing from the home builder to the home buyer which should be on or after January 1, 2009, and before December 1, 2009.*
9. Can I claim the tax credit if I finance my home purchase under a mortgage revenue bond program?
The tax credit can be taken in combination with a mortgage revenue bond (MRB) program for this tax credit effective on or after January 1, 2009, and before December 1, 2009.*
10. Can I claim this tax credit and the Washington, D.C. first time home buyer tax credit if I reside in Washington, D.C.?
No, you can claim only one tax credit.
11. Can I claim the tax credit if I am not a U.S. citizen?
You may be able to. The IRS provides a definition of 'nonresident alien' in IRS Publication 519. However, anyone who is not a nonresident alien as defined by the IRS and who has not owned a principal residence in the previous three years and meets the income limits test may claim the tax credit for a qualified home purchase.
12. I bought a house in 2008. Do I qualify for this tax credit?
You do not qualify for this tax credit but may qualify for a different tax credit. This tax credit is effective on or after January 1, 2009, and before December 1, 2009.*
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