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This summary and forms needed below are to help those desiring to use the
current Home Buyer Tax Incentives!
2010 Extension of $8,000, New $6,500 Existing Home Buyer Tax
Credit from the 2009 Stimulus Package and Increase in Income Limits
Written by Andy,
Saving to Invest,
www.SavingtoInvest.com
For complete summary, go to:
http://www.savingtoinvest.com/2009/02/15000-first-home-buyer-tax-credit-in.html
Following Congress approval, President
Obama has signed off on the bill approving
an extension of the $8,000 new home buyer tax credit until April
30th 2010. Also, the new provisions in the extension are NOT
retroactive. Here is a summary of the new and updated provisions
and their impact on you if you have or are planning to buy a
house. New IRS forms and claiming instructions are also
provided.
Qualification Period : First-time home buyers who bought after
January 1, 2009 and before April 1 2010 (with closing to take
place before July 1 2010), would get the $8,000 home buyer tax
credit. For the purposes of claiming the tax credit, the
purchase date is the date when closing occurs and the title to
the property transfers to the home owner. If
you and your spouse claim the credit on a joint
return (both of you must meet the income and past ownership
criteria to qualify), each spouse is treated as having been
allowed half of the credit for purposes of repaying the credit.
So the total amount claimable is still only $8000 (up to April
30th 2010).
Income qualification limits: The home buyers’ credit would be
available to individuals with a modified adjusted gross income
(MAGI) of up to $125,000, or $250,000 for couples, up from
$75,000 for individuals and $150,000 for couples under the
original rules. The higher income limits
are only for homes purchased after Nov. 6, 2009.
That is, the existing MAGI phase-outs of $75,000 to $95,000 or
$150,000 to $170,000 for joint filers still apply to purchases
on or before Nov. 6, 2009. Those with incomes higher than the
above limits do not qualify for any part of the tax credit.
*NEW*
Current Homeowners looking for a
replacement primary residence could also qualify for a
$6,500 (up to $3,250 for a married individual
filing separately) under the new “long-time resident” provision.
They must have lived in the same principal residence for any
five-consecutive year period during the eight-year period that
ended on the date the replacement home is purchased. This new
provision also only applies to homes purchased after Nov. 6th
2009. The IRS has stepped up compliance checks involving the
home buyer credit for those with past homes and they must
provide a mortgage Interest Statement, Property tax records or
Homeowner’s insurance records, to prove compliance with past
residency criteria.
Claiming the new home buyer credit: For qualifying purchases, taxpayers have
the option of claiming the credit on either their 2009 or 2010
return. A
new version of Form 5405, First-Time Home buyer Credit, is now
available on the IRS website. Taxpayers claiming the credit on
their 2009 returns,
will not be able to file
electronically because of the added documentation requirements,
but instead will need to file a paper return by using the new
version of Form 5405. A taxpayer who purchased a home on or
before Nov. 6 and chooses to claim the credit on an original or
amended 2008 return may continue to use the current version of
Form 5405.
In addition to filling out a Form 5405, all
eligible home buyers must include with their
2009 tax returns one of the following
documents in order to
receive the credit:
The IRS expects to start
processing 2009 tax returns claiming the home buyer credit in
mid-February after it completes the updating and testing of
systems to meet the law’s new requirements and to deter fraud
related to the home buyer credit.
Normally, it takes about
four to eight weeks to get a refund claimed on a complete and accurate paper
return where all required documents are attached. For those
homebuyers filing early, the IRS expects the first refunds based
on the homebuyer credit will be issued toward the end of March.
The new $8000 credit can be used towards
the
down payment of a house bought in the credit qualifying
period. You need to work with your lender to take advantage of
this provision.
If two or more
unmarried individuals buy a main home, they can allocate the
credit among the individual owners using any reasonable method.
The total amount allocated cannot exceed the smaller of $8,000
or 10% of the purchase price.
Note: A reasonable
method is any method that does not allocate all or a part of the
credit to a co-owner who is not eligible to claim that part of
the credit
Click here for a PDF copy of the IRS Form 5405 Home Buyer Tax Credit information
Please contact your accountant for details and further questions.
Contact: Pam Marron, 24 Yrs.
Sr. Loan Officer
Licensed Correspondent Lender |
