Extended Home Buyers Tax Credit, Explained

Charlottesville Real Estate Last November, Congress voted to extend the First Time Home Buyers Tax Credit Package and also expand the credit to current home owners purchasing a home. Below are some FAQs about these programs.

1.Who Qualifies for these tax credits?

Home buyers, who have not owned a home for three years, qualify for the first time home buyers credit. The home must be purchased between November 7,2009 and April 30, 2010.

Homeowners who have used the home being sold as their primary residence for five consecutive years within the last eight years who purchase a home for their primary residence between November 7, 2009 and April 30, 2010 also qualify.

2. What properties qualify for the tax credits?

Single-family homes, condos, townhomes and coops are eligible for the tax credit.

3. How much credit is available to participants?

First time home buyers may qualify for up to $8000. Current home owners may qualify for up to $6500.

4. What variables determine the amount of the tax credit?

Price of the home: The tax credit can only be used on homes purchased for $800,000 or less.

Your income: Single buyers with income under $125,000 and married buyers with income under $225,000 may receive the maximum tax credit. If your income is over these figures but less than $145,000 for single buyers or $245,000 for couples, you may still qualify for a lesser credit amount.

5. What if I cannot close on my purchase before April 30, 2010?

No worries! Provided that the purchase contract is ratified by April 30th, you have until July 1, 2010 to close on the property.

6.Will I need to repay the tax credit?

No, provided that the home is your primary residence for at least three years. If you sell the property early, then the entire tax credit must be repaid.

7. Can I decide which year to apply the tax credit?

Buyers purchasing in 2010 will have the following options:

Claim the credit on their 2009 tax return. This can be done even if the home is actually purchased in 2010. An amended return must be filed in this case if the settlement occurs after April 15, 2010.

Or the credit can be claimed on your 2010 return.

8. How do I claim the credit on my tax returns?

You will need to obtain Form 5405 to determine the amount of your credit.

Apply the credit when you file your return.

Attach documentation of the purchase to your return.

Since every tax situation is unique, we encourage you to seek the advice of a qualified accountant to determine the best course of action for your financial goals.

Extended Home Buyers Tax Credit, Explained

All information in this newsletter is deemed accurate but not guaranteed.

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