The most recent update of the government tax credit for homebuyers reported that following approval from the Congress, President Barack Obama has signed a bill approving the extension of the new $8,000 homebuyer tax credit until April 30, 2010. The new provision in the tax credit extension is non-retroactive.
First-time homebuyers who bought a house after January 1 of last year and before April 1 of this year with the closing taking place before July 1 will be able to get $8,000 credit. To be able to claim the credit, the date of purchase must be the date when the exact closing occurs and the home title is transferred to the homeowner.
The credit is available for persons with modified adjusted gross income or MAGI, from $75,000 for single individuals and $250,000 for couples. The higher income limit is only for those houses purchased after November 6, 2009.
The new tax credit is not only available for first time homebuyers but is now also available for those who have lived in the same home for the last five years. The new provision is only applicable to homes bought after November 6 of last year. The IRS has launched compliance checks allowing the homebuyer credit to those with past homes as long as they are able to present a mortgage interest statement, property tax or homeowner’s insurance as proof if their past residency in the said home.
For persons who qualify, they have an option to get the tax credit on either the 2009 or 2010 tax returns. A new 5405 Form for First-Time Homebuyer Credit is now available on the IRS website. Nevertheless, taxpayers who are going to claim it on their 2009 tax returns cannot file electronically because of added document requirements. They are required to file a paper return using the new form.
Aside from filing Form 5405, all eligible homebuyers must also include along with their 2009 tax returns documents like a copy of the settlement statement with complete name and address of all parties, the purchase price and the date of purchase. For mobile home buyers who cannot present a settlement statement, they should submit a copy of the sales contract with complete names of parties, their addresses, signature and the purchase date. For a newly built house without a settlement statement, a copy of the certificate of occupancy with the owner’s name and the date of the certification will suffice.
The IRS expects to start processing tax returns for 2009 after completion of the updating and testing of the systems in order to meet the requirements by law. Normally, it takes between four to eight weeks to claim the tax refund. For those who filed early, the IRS expects to get the first refunds towards the end of March. You can use the $8,000 tax credit for down payment of a home. It is important to work with your lender to take advantage of this credit.
Homes that cost more than $800,000 cannot qualify for this credit and a person should be at least eighteen years or more to claim it.
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