Hello,
1st I would like to say always check with your tax professional.
First Time Homebuyer Tax Credit Extended Into 2010!
Plus...A New Tax Credit for Certain Existing Home Owners!
It's official.President Obama has signed a bill that extends the tax credit for first-time homebuyers (FTHBs) into the first half of 2010.This program had been scheduled to expire on November 30,2009.
In addition to extending the tax credit of up to $8,000 through June 30,2010,the extension measure also opens up opportunities for others who are not buying a home for the first time.
So Wn the event no taxes are owed,the IRS will issue a check for the amount of the tax credit an individual is owed.Unlike the tax credit that existed in 2008,this credit does not require repayment unless the home,at any time in the first 36 months of ownership,is no longer an individual's primary residence.
What is the tax credit for first-time homebuyers (FTHBs)?
An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home.If the amount of the home purchased is $75,000,the maximum amount the credit can be is $7,500.If the amount of the home purchased is $100,000,the amount of the credit may not exceed $8,000.
Who is eligible for the FTHB tax credit?
Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible.This applies both to single taxpayers and married couples. In the case where there is a married couple,if either spouse has owned a primary residence in the last 36 months,neither would qualify.In the case where an individual has owned property that has not been a primary residence,such as a second home or investment property, that individual would be eligible.
As mentioned above,the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500.
How do I claim the credit?
For those taking advantage of the tax credit in 2009,you may choose to either apply for the credit with your 2009 tax return or you may apply for the credit sooner by filing an amended 2008 tax return with Form 5405 (http://www.irs.gov/pub/irs-pdf/f5405.pdf).
Can you claim the tax credit in advance of purchasing a property?
No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place.
Can a taxpayer claim a credit if the property is purchased from a seller with seller financing and the seller retains title to the property?
Yes. In situations where the buyer purchases the property,even though the seller retains legal title, the taxpayer may file for the credit.Examples of this would include a land contract, contract for deed,etc.According to the IRS,factors that would demonstrate the ownership of the property would include: 1. the right of possession, 2. the right to obtain legal title upon full payment of the purchase price, 3. the right to construct improvements, 4. the obligation to pay property taxes, 5. the risk of loss, 6. the responsibility to insure the property and 7. the duty to maintain the property.
Are there other restrictions to taking the credit?
Yes.According to the IRS,if any of the following describe your situation, a credit would not be due.
You buy your home from a close relative.This includes your spouse,parent,grandparent,child or grandchild.
You do not use the home as your principal residence.
You sell your home before the end of the year.
You are a nonresident alien.
You are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year.(This does not apply for a home purchased in 2009.)
Your home financing comes from tax-exempt mortgage revenue bonds(This does not apply for a home purchased in 2009.)
You owned a principal residence at any time during the three years prior to the date of purchase of your new home.For example,if you bought a home on July 1, 2009, you cannot take the credit for that home if you owned,or had an ownership interest in,another principal residence at any time from July 2, 2006, through July 1, 2009.
Can you buy a home from a step-relative and be eligible for the credit?
Yes.Provided the person you are buying a home from is not a direct blood relative,the purchase would be allowed.
Can parent(s) who will not live in the property cosign for a mortgage for their child and the child that is a qualifying FTHB still be eligible for the credit?
Yes.
Can a separated spouse who has not owned a home for four years qualify for the FTHB tax credit if the spouse has owned a property anytime in the last three years?
No.However,the spouse may be eligible for the repeat buyer credit.The best path to take in any situation regarding income taxes is to speak with a professional tax preparer or CPA.
| Buy Now and Get an $8,000 Tax Credit By Deanna Lynn Sletten Photo: © Steve Jacobs - iStockphoto  With only a few months left to take advantage of the first-time homebuyer tax credit, now is the time for serious buyers to purchase a home. Until December 1, 2009, first-time homebuyers can receive a tax credit of 10% of the home's value up to a maximum of $8,000 if the sale of the home closes before the deadline. In this buyers market of low interest rates and an abundance of homes for sale at affordable prices, the extra incentive of the tax credit gives first-time homebuyers the chance of securing the home of their dreams at a price they can afford. What homes qualify? Buyers who haven't owned a principal residence home in three years can qualify for the tax credit. Any home purchase qualifies, including single-family homes, townhouses, condominiums, manufactured homes and houseboats. Qualifying homes may be an existing home, new home or a home the owner contracted to build. Those who own a vacation home or rental homes that are not their principal residence are also eligible for the tax credit if they buy a principal residence. |
Are there income restrictions? Income limitations of $75,000 for single taxpayers and $150,000 for married taxpayers who file a joint return apply to this tax credit. However, taxpayers who earn slightly more than the limits can apply for a reduced tax credit. Is it difficult to claim the tax credit? Claiming the tax credit is easy. When filing your 2009 income tax return simply complete IRS Form 5405 and then enter the amount from the bottom of that form on line 67 of Form 1040. The tax credit will be deducted from the income taxes you owe. If you do not owe any taxes, you will receive a refund check for the full amount of your tax credit. What if I need the tax credit immediately? For homebuyers who wish to collect or use their anticipated tax credit before filing their 2009 taxes there are some alternate options available. Buyers can adjust their tax withholding amount on their W-4 through their employer so fewer taxes are taken out of their paycheck. This will allow them more money in pocket for the remainder of the year. Buyers purchasing through the Department of Housing and Urban Development (HUD) or a Federal Housing Authority (FHA) approved loan can get a short-term loan for their anticipated tax credit to use for closing costs or as a portion of the down payment. Buy now and take advantage of this tax credit. It is the perfect way to afford a home you might otherwise have not been able to purchase. |
Welcome, and thank you for visiting! Having the right real estate agent means having an agent who is committed to helping you buy or sell your home with the highest level of expertise in your local market as well as helping you understand each step of the buying or selling process along the way. I am a full-time, full service Zip Realty REALTOR serving Hampton Roads. I sell and list homes in Hampton Roads. I take pride in my understanding of the market and the industry. What I like the most about my job is possibility to meet new people almost every day. I enjoy helping others finding the home of their dreams and helping them make it a reality. I listen to my clients needs and put my knowledge and experience to make their next real estate transaction as comfortable and easy as possible
ActiveRain Corp. is not responsible for the accuracy of the site's content (which is written by members of the ActiveRain Real Estate Network) and does not endorse the views of the real estate agents, mortgage brokers, and others listed here.
Powered by the ActiveRain Real Estate Network
© 2009 ActiveRain Corp. All Rights Reserved
