Last November, the US government passed a law that lets any eligible taxpayer get an $8,000 deduction on your 2009 taxes. The credit reduces your tax bill or increases his or her refund, dollar for dollar. The first-time homebuyer credit is different from most tax credits in that if you are eligible whether or not you owe any taxes. For a home buyer, this is the closest thing to free money that you will see any time soon.
Top 10 things you should know
1. You must buy – or enter into a binding contract to buy a principal residence – on or before April 30, 2010.
2. If you enter into a binding contract by April 30, 2010 you must close on the home on or before June 30, 2010.
3. For qualifying purchases in 2010, you will have the option of claiming the credit on either your 2009 or 2010 return.
4. A long-time resident of the same home can now qualify for a reduced credit. You can qualify for the credit if you’ve lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the new home is purchased and the settlement date is after November 6, 2009.
5. The maximum credit for long-time residents is $6,500. However, married individuals filing separately are limited to $3,250.
6. People with higher incomes can now qualify for the credit. The new law raises the income limits for homes purchased after November 6, 2009. The full credit is available to taxpayers with modified adjusted gross incomes up to $125,000, or $225,000 for joint filers.
7. The IRS will issue a December 2009 revision of Form 5405 to claim this credit. The December 2009 form must be used for homes purchased after November 6, 2009 – whether the credit is claimed for 2008 or for 2009 – and for all home purchases that are claimed on 2009 returns.
8. No credit is available if the purchase price of the home exceeds $800,000.
9. The purchaser must be at least 18 years old on the date of purchase. For a married couple, only one spouse must meet this age requirement.
10. A dependent is not eligible to claim the credit.
Your situation may be different, but basically you can get the full benefit if
For qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 return.
Special IRS requirements
Because of the documentation requirements for claiming the credit, taxpayers who claim the credit on their 2009 tax return must file a paper — not electronic — return and attach Form 5405, First-Time Homebuyer Credit and Repayment of the Credit (see the Form 5405 instructions), and a properly executed copy of a settlement statement used to complete the purchase.
Check out the IRS Video
Where to go for more information
IRS information page on this tax credit
IRS news release March 18,2010
IRS news release Novemer 24, 2009
Do you qualify? - Take the quiz
You can take the Zillow quiz in the right column of this site to see if you qualify.
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