Many taxpayers who purchase a home this year will qualify for an
$8,000 federal tax credit. The refundable first-time homebuyer credit
is a major tax provision in the American Recovery and Reinvestment Act
of 2009. But time is running out to qualify for this credit.
Here are ten things the IRS wants you to know about the first-time homebuyer credit:
To be considered a first-time homebuyer, you – and your spouse if
you are married – must not have jointly or separately owned another
principal residence during the three years prior to the date of
purchase.
You cannot claim the credit before there is a completed sale and
purchase of the residence. The sale and purchase are generally
completed at the time of closing on the purchase.
To qualify for the credit, the completed purchase must occur before December 1, 2009.
The home must be located in the United States.
The credit is either 10 percent of the purchase price of the home or $8,000, whichever is less.
The amount of the credit begins to phase out for taxpayers whose
modified adjusted gross income is more than $75,000 or $150,000 for
joint filers.
The credit is fully refundable. A homebuyer with no taxable income,
who qualifies for the credit, may file for the sole purpose of claiming
the credit and receiving a refund. The credit will be paid out to
eligible taxpayers, even if they owe no tax or the credit is more than
the tax owed.
The credit is claimed on IRS Form 5405, First-Time Homebuyers Credit.
Taxpayers can claim the credit for a qualified 2009 purchase on
either their 2008 or 2009 tax return. For those who have filed a 2008
return, a Form 1040X, Amended U.S. Individual Income Tax Return can be
filed in order to get a refund in 2009.
The credit for qualified 2009 purchases does not have to be repaid,
as long as the home remains your main home for 36 months after the
purchase date.
Qualified taxpayers who have been considering a main home purchase
may find extra incentive from this tax credit to buy now so they can
complete the purchase before the December 1 deadline.
For more information on this and other key tax provisions of the Recovery Act visit the official IRS Website at IRS.gov/Recovery.
