The $8,000 First-time homebuyer tax credit explained
Posted by Amy Coletta, RE/MAX Results Recruiter
The $8,000 First-time homebuyer tax credit explained
Initially, I thought this post would be a simple cut and paste job about this part of the housing stimulus package. However, after only a few minutes of research, I discovered a great deal of speculation and contradiction in regards to the $8,000 tax credit for first time homebuyers. I consulted with two professional tax preparers in order to get to the bottom of a well-intentioned, but somewhat confusing, tax incentive.
These FAQ's should help you assist, and hopefully encourage, your clients to take advantage of this "free money" from the government. Make sure you encourage your buyers to seek the advice of a tax professional prior to filing with this credit.
Who qualifies?
A first time homebuyer is not necessarily someone who has never been a homeowner. If you (or your spouse if married, but both spouses must qualify if married) have not owned your principal residence for a 3-year period before your purchase, you qualify as a first-time homebuyer. First-time homebuyers who purchase a principal residence on or after January 1, 2009 and before December 1, 2009 are eligible. Unmarried couples or individuals purchasing a home jointly can split the credit on their respective returns as long as they each qualify as a first time homebuyer. If only one of the buyers qualifies, that individual can claim the entire credit.
If you have owned a house that is not your principal residence, you may still qualify. Additionally, if the home being purchased is a mobile home or condo, it qualifies, as does a new home being constructed.
When is the purchase eligible?
In order to qualify for the credit, the home must be purchased no earlier than January 1, 2009 and no later than November 30, 2009.
Will this credit need to be repaid?
Unlike the 2008 tax incentive offered, the 2009 tax credit is not required to be repaid as long as the home purchased is still the buyer's primary residence three years after the date of purchase.
When can I claim the credit?
You can use this credit on your 2008 or 2009 tax returns. If you have filed your 2008 return already, it can be amended with Form 5405 from the IRS. If you plan to purchase your home after April 15th and still want to claim the credit on this year's return, you can file an extension until October 15, 2009.
What are the income limits for the credit?
It has been widely publicized that the income limits for eligibility are $75K for individuals and $150K for married couples filing jointly. However, there is actually a phase-out to $95K for individuals and $170K for marrieds, with smaller credits offered. Income above those amounts is ineligible.