Why You Want to Take Advantage of the Home Buyer Tax Credit
Posted by : Premraj | Posted on : Tuesday, December 8, 2009
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If you are looking to buy a home in the near future, there are tax credits that have been set up by the government that you might be eligible for. There are two different types that began in 2009 by the government and their amounts depend upon whether you are a first time home buyer or a repeat home buyer. For the qualified first time home buyer, the tax credit given would be around $8,000 and for the qualified repeat home buyer, the tax credit is around $6,500.
For the person who is a qualified first time home buyer, any purchases of homes between January 1st, 2009 through April 30th, 2010 can be eligible. Should a pending sale be signed for on April 30th of 2010, they will have until June 30th, 2010 to be considered for the tax credit.
For anyone who purchases a home after November 6th, 2009 will have income limits set upon them at $125,000 per year for a single income and $225,000 for married couples filing jointly. Anyone who is trying to purchase a home whether it’s a new home or a resale home are eligible for the $8,000 tax credit. Those who are claimed as dependents or are 18 years or younger are not eligible.
What makes a person a first time home buyer? If they have not owned a residence three years prior to the current home that they are thinking of purchasing, qualifies them as a first time buyer. For a married couple it must mean neither one of them has owned a home the previous three years. Owning a vacation home, does not qualify as a principle residence so would not count against the first time buyer regulations.
The tax credit that is given to the buyer by the government is figured by estimating 10% of the home’s purchase price or the maximum amount of $8,000.
A repeat home buyer is one that already owns or has owned a home within the three years of purchasing their second home. Anyone who is a qualified buyer and wants to purchase a second home is qualified for the $6,500 homebuyer tax credit.
The credit is determined the same way as with the first time buyer, 10% of the purchase value of the home, or a maximum of $6,500. The income limits are also the same. Single home buyer’s income limit being $125,000 and married filing jointly would be $225,000. Any more than that and they do not qualify.
The way that a person files for their home buyer tax credit is by using their federal income tax return. Homeowners should complete the IRS Form 5405 in order to figure out what their tax credit will be, and then they would claim this amount on line 67 of their income tax form for 2009.
There isn’t much more to it than that. No applications will be required from the home buyer nor is there a pre-approval necessary. The homeowners though, must pass the tax credit tests and income limits. One cannot request a tax credit from a future purchase though; it must be for a home that has already been purchased.
