What is the
Homebuyer tax credit?
The law provides a
tax credit for First time homebuyers equal to ten
percent of the qualified home purchase price. The
credit is capped at $8,000.
The newly-enacted
tax credit provides eligible home buyers who have
lived in their current home consecutively
for five of the previous eight years with up to
$6,500 in tax credits.
Who is eligible
for the First-time homebuyer tax credit?
• First-time home
buyers, defined as a buyer who has not owned a
principal residence in the previous 3 years (NOT
NECESSARILY A FIRST TIME HOMEBUYER!)
• U.S. citizens
who file tax returns
• Eligible
properties include any single family home that will
be used as a principal residence including condos,
co-ops and townhouses
• To qualify,
buyers must have an accepted contract on the sale of
the home before the end of business on Friday April
30th, 2010 and close by June 30th, 2010.
Who is eligible
for the Move-up homebuyer tax credit?
• Current home
owners purchasing a home between November 7th, 2009
and April 30th, 2010, who have used the home being
sold or vacated as a principal residence for five
consecutive years within the last eight.
• U.S. citizens
who file tax returns
• Eligible
properties include any single family home that will
be used as a principal residence including condos,
co-ops and townhouses that are purchased for
$800,000 or less
• To qualify,
buyers must have an accepted contract by on the sale
of the home before the end of business on April
30th, 2010 and close by June 30th, 2010
* The full $8,000
credit is available for individuals with modified
adjusted gross income (per IRS definition) of no
more than $125,000 ($225,000 for couples filing
jointly)
* A partial credit
is available for individuals with modified adjusted
gross income between $75,000 and $95,000 (between
$150,000 and $170,000 for couples filing jointly)
for Purchases on or before Nov 6th 2009
When will you
receive the tax credit?
The credit reduces
the income tax liability for the year of purchase.
Therefore to receive the credit for your income
taxes filed by April 15th, 2010 for homes purchased
in 2009 or April 15th, 2011 for homes purchased in
2010, you need to have an accepted contract by close
of business April 30th, 2010 and close by June 30th,
2010. The credit can be claimed even if the taxpayer
has little or no federal income tax liability to
offset. Typically this involves the government
sending the taxpayers a refund check.
Payback
Provisions
* Homebuyers
claiming a $8,000 credit will not have to repay the
credit for any home purchase on or after January 1,
2009 and before June 30th, 2010
* Homebuyers
claiming a $6,500 credit will not have to repay the
credit for any home purchase on or after Nov 7th,
2009 and before June 30th, 2010
* If the home is
sold within three years of purchase, entire amount
of credit is recaptured on sale. Applies only to
homes purchased in January 2009 to June 30th, 2010.
1
Consult a tax advisor regarding your individual
situation. This information is not intended to provide
legal advice, tax advice, accounting services, or
investment advice, nor should it be relied on for legal
advice. Please seek the advice of your own legal
counsel.
2 Not available
for those who qualify for a similar tax credit in the
District of Columbia, or for those who finance their
home purchase under a mortgage revenue bond program.
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