Tax Credit to Buyers Now Available
By · December 4, 2009
Have you heard about the $8,000 that the government is giving to first-time home buyers ($6500 to repeat buyers)? A tax credit will be given in the amount of 10% of the purchase price of the new home, not to exceed $8,000 for first time buyers (or $6500 for repeat buyers). This tax credit is good for home purchases of less than $800,000 which occur from January 1, 2009 through April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify. There are income limits of $125,000 for single tax payers and $225,000 for married tax payers filing jointly (for sales occurring after November 6, 2009). For unmarried joint purchasers, the IRS allows the tax credit to be allocated to any purchaser that qualifies as a first-time home buyer. A first-time homebuyer is someone who has not owned a property within the past 3 years. This can be very beneficial if a parent assists their son/daughter in buying a home. The credit also applies if you have co-signers on the mortgage loan.
The government has added a new tax credit of up to $6,500 for repeat buyers. In order to qualify for the repeat buyer tax credit of $6,500, these buyers must have owned and used a prior residence as a principal residence for any five consecutive years in the 8-year period before the date of the purchase of the new principal residence.
Now, what is a tax credit? A tax credit reduces your income tax bill on a dollar for dollar basis. This credit can be claimed on your 2009 tax return, due April 15, 2010. However, if your tax bill is less than the tax credit, you will still receive the money in the form of a check. All you need to do is file a form with the IRS after you buy your new home and they will send you a refund check. Remember though, you will receive this refund from the IRS after you purchase your new home, so you cannot use the funds to help with your down payment.
For further information, please talk with your tax accountant or go to the IRS website at:
If you are considering a move, now may be the time to do it.