Homebuyer tax credits are available for Americans buying a home for the first time. Originally, this applied to home purchases from April 9, 2008 to July 1, 2009. Nonetheless, President Obama extended the original period to May 1, 2010 and gave buyers until end of June 2010 to close their transactions. Furthermore, it has been extended to September 30, 2010.
Buyers who qualify for this tax credit are those who are defined by law as people who have not owned a principal residence during the three-year period prior to the home purchase. They may qualify up to ten percent of the purchase price of the property up to a maximum of $8,000. Present homeowners who are living in their main residence for five years in a row out of eight and are buying a home to be their primary residence could also qualify for ten percent, maximum of $6,500.
The homes that could qualify for these tax credits include homes with a purchase price of less than $800,000, which include newly constructed homes, townhomes, single-family detached homes, resale homes and condos as long as they will be used as their primary home. Rental homes and vacation homes do not qualify. Explained further, a tax credit is refundable, which means that if the income tax amount you owe is less than the amount of credit that you qualify, the US government will send you a check with the difference of the amount. For instance, a buyer buying home for the first time qualifying for the full $8,000 credit who owes $5,000 income tax pays nothing to the IRS and will receive $3,000 payment from the government. If you will receive a $1,000 refund, you will get $9,000 overall.
The tax credit is a true credit in the sense that it need not be repaid unless the homeowner decides to sell the home or stops using it as his or her main residence within three years after the home purchase was made. Many people have signed contracts to purchase a home by September 30, before the tax credit expired. For tax credits for first time buyers or those who own a home currently, if the purchase date is May or June 2010, they should prove that they entered into a contract to buy a home before May. It is necessary to submit the required documents for this. Those who are members of the intelligence community or the military have an added year to buy a home and qualify for the tax credit.
Filing and claiming for the tax credit needs documentation and should be submitted and filed through mail. Nonetheless, many people used the Turbo Tax, TaxAct in calculating their taxes, completing the returns, printing the paperwork and submitting them. When homebuyers started claiming their first-time homebuyer tax credits along with the amended 2008 tax return, they began receiving the credit after six weeks. With more and more people applying for the tax credit, the process takes much longer, especially if the documentation is incomplete.
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