» A First Time Home Buyer is defined as someone who has not owned a home within the last 3 years. This means that a person who sold their home more than 3 years ago and has been renting ever since can be considered a First Time Home Buyer in addition to individuals who have never owned a home before.
Long Time Home Owners
» A Long Time Home Owner is defined as someone who has owned a home and lived in it for at least 5 out of the last 8 years. This person can sell their existing home and qualify for a tax credit on their new purchase.
How Much of a Tax Credit is Available?
For First Time Home Buyers the credit is equal to 10% of the purchase price of the home, up to $8,000.
For Long-Time Home Owners the credit is equal to 10% of the purchase price of the home, up to $6,500.
How Much Longer Are These Credits Available?
The government has extended these credits until April 30, 2010. To get the credit, a property must be under contract by the end of April and must close by the end of June.
What Kinds of Properties Qualify for the Tax Credit?
Any house, condo, townhome or co-op being used as a primary residence under $800,000 qualifies. Properties over $800,000 do not qualify for the tax credit.
Are There any Income Limitations to Qualify for the Tax Credit?
Yes. For individuals making up to $125,000 or joint filers making up to $225,000, there is full Tax Credit eligibility. On income greater than that, the tax credit reduces on a sliding scale and eventually phases out completely.
How is the Tax Credit Applied for?
The credit needs to be applied for on the Home Buyer’s tax return using IRS form 5405. The credit will reduce a taxpayer’s bill if taxes are owed or increase a refund to be received. The credit is fully refundable meaning that credit will be paid even if there are no taxes owed or if the credit is greater than any taxes owed.
Does the Credit Get Repaid to the Government?
No. If the Home Buyer remains in the home for 3 years, no amount of the credit needs to be repaid. However, if the home is sold within three years of the purchase, the full amount of the credit must be paid back.
What is the First Step to Getting the Home Buyer Tax Credit?
Contact a local Real Estate Broker to learn what properties are available which suit your needs. Identifying a property is the first step towards realizing your Home Buyer Tax Credit. Time is of the Essence! This opportunity is only available through the end of April, 2010!
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