Basics of the Newly Revised Home Buyer Tax Credit

Thanks to a new version of the First-Time Home Buyer Tax Credit which was signed into law by President Obama on November 6, 2009, qualifying first-time home buyers in Glenview, Wilmette or across the country, as well as those who already own a home, now have until April 30, 2010 to sign a purchase agreement on a new home and until June 30, 2010 to close on their new home in order to qualify for the tax credit. Here are some facts about this program:

Who is eligible for this tax credit? Previously, only first-time home buyers were eligible for this tax credit. That has now changed and home buyers who owned their principal residence for at least the past eight years and lived in it for at least five concurrent years prior to purchasing the new home are eligible for the tax credit as well.

Which homes qualify for the tax credit? The home being purchased must be used as the home owner's principal residence and the purchase price must be less than $800,000. A vacation home or investment property will not qualify for the tax credit. Also homes bought from relatives or spouses do not qualify.

Does the tax credit have to be repaid? Unlike the tax credit of July, 2008, which was more of an interest-free loan, this one does not have to be repaid.

How is the tax credit figured? The tax credit is 10% of the home's purchase price, up to $8,000 for first-time home buyers and $6,500 for buyers having already owned a home.

When must the home be purchased? To qualify for the home buyer tax credit, the principal residence must be purchased on or after January 1, 2009, and before June 30, 2010.

Is eligibility based on the home buyer's income? Yes. Single taxpayers must have income of $125,000 or below to qualify while married couples income must be $225,000 or below. This is an increase from the previous bill.

How does the homeowner figure their tax credit? Taxpayers should complete IRS Form 5405 to figure the amount of credit they will receive. This amount is then claimed on their income tax form.

For answers to other questions and general information about the Home Buyer Tax Credit visit the Federal Housing Tax Credit site.

The Marla Schneider Team can answer lots of questions concerning buying a home in Glenview or Northbrook, whether it's your first home or not. See what other resources she has to offer.