The Benefits Of Tax Credits When Purchasing Your First Home
August 12, 2010 by Guest Author
Filed under Debt
As stated in the Worker, Homeownership, and Business Assistance Act of 2009, new or first time home buyers can qualify for a tax credit. The tax credit will be equal to ten percent of the home’s purchase price up to a maximum amount of $8,000.
A new home buyer or first time home buyer is defined as a buyer who does not own a principal residence for three years before this particular purchase. For married taxpayers, both the buyer and the spouse’s home ownership history will be checked.
Taxpayers’ dependents and those younger than 18 years of age are not eligible for the tax credit program. Also, the tax credit is applicable only to homes not more than $800,000, and will be paid back if the property is sold or once it is no longer the buyer’s principal home within three years after it was acquired.
If the home was purchased on or after 01 January 2009 and on or before 06 November 2009, the income limits of $75,000 for single taxpayers and $150,000 for married ones who are filing jointly will apply. If the home was purchased after 06 November 2009 and on or before 30 April 2010, the income limits are $125,000 for single taxpayers and $225,000 for married couples.
Official forms have to be completed and some documentations are required for buyers to claim the tax credit. They need to complete IRS Form 5405, which has to be attached with the HUD-1 settlement form.
Where the HUD-1 is not applicable, a copy of the certificate of occupancy can be used in its place. For homes purchased in 2010, buyers can choose to claim refund on either the 2009 or 2010 tax return.
If you want to receive the tax credit, you need to have bought the place on or after the 01st of January 2009 and on or before the 30th of April 2010. If your binding sales contract was signed by 30 April 2010, your transaction must be completed before the 30th of June 2010.
A recent development has been a suggestion the deadline to finalize the purchase is set at the 30th of September 2010. This is because the credit has stimulated sales and there are too many to process.
This individual has been providing advice with respect to tax relief for the previous three years. Additionally, this individual enjoys publishing articles on New York neighborhood subjects, like Midtown condo as well as Sutton Place real estate.
