First Time Home Buyers Tax Credit
First Time Home Buyers, if you are smart, you will consider buying a home before December 1, 2009 and claiming your First Time Home Buyer Tax Credit that is afforded you by the 2009 Federal Governement stimulus package.
A first time home buyer is defined as someone who has not owned a home in the three years prior to the purchase. For married taxpayers, the law checks both the homeownership history of both the taxpayer and his or her spouse.
A buyer is not disqualified as a first time home buyer if they own a vacation home or rental property that is not used as their primary residence.
To qualify for this tax credit you must:
- Make the home your primary residence
- Close and transfer title on the home on or after Jan. 1, 2009 and before Dec. 1, 2009
- As a single person have an income of less that $75,000 or $150,000 for married filiing a joint return
How much is the tax credit:
- 10% of the purchase price up to $8,000
- If you live in the home for 36 months you do not have to pay back the tax credit
You claim the tax credit on your federal income tax return. Use IRS Form 5405 to determine your tax credit amount an then claim that amount on Line 69 of your 1040 income tax return. Remember to claim the credit it must be a completed purchase. You cannot claim the credit for a purchase in a future date.
Their has been some rumor mill about the credit deadline being extended, but I have seen nothing official about this at this time.
What Type of Homes Qualify for the First Time Home Buyer Tax Credit?
Any home that is used as a principal residence. This would include single family detached home, manufactured homes, attached home such as townhouses and condominiums and houseboats.
Refundable Tax Credit
The fact that this tax credit is refundable means that if you have no offsetting tax liability then yo will receive a check for the full tax credit. If you have a tax liability then the refundable tax credit will be used to offset all or a portion of that tax liability.
Building a New Home
If you have hired a contractor to construct a new home for you and you occupy the house or or after Jan. 1, 2009 and before Dec. 1, 2009 then you will also qualify for the first time home buyer tax credit.
Monetization of the Tax Credit
The Secretary of Housing and Urban Development has announced that HUD will allow “monetization” of the first time home buyer tax credit. This means that non-profits and FHA-approved lenders will be allowed to give first time home buyers short-term loans of up to $8,000 which can be used to help or pay for their closing costs on their new home purchase. They will not have to purchase and then wait for their tax credit after completing their federal tax return.