Homebuyer Tax Credit Extended and Expanded until 30 April 2010
New law extends deadline for homebuyers to purchase until 30 April 2010. Buyer has until 30 June 2010 to close providing a contract is in place by 30 April 2009. Members of our Armed Services have an extra year.
The Tax Credit for first time homebuyers is equal to 10% of the purchase price up to $8,000. The Tax Credit for Resale homebuyers is capped at $6,500. The maximum price of the home may not exceed $800,000. Homebuyers must be 18 years of age or older. Dependents do not qualify for the credit.
A First Time Homebuyer is defined as someone who has not owned their principal residence for 3 years.
A Resale Homebuyer is defined as someone who has owned and occupied their principal residence for 5 consecutive years out of the last 8 (count from the date of closing). If married, both spouses must meet the eligibility requirements.
Who Cannot Claim the Tax Credit?
- homebuyers who are non-resident aliens.
- if the home purchased is outside of the United States.
- if the home is a gift or inheritance.
What are the income limitations?
- Increased from $75,000 to $125,000 for Single Filers
- Increased from $150,000 to $225,000 for Joint Filers
- An adjusted credit is available for those with incomes between $125-145,000 (single) and $225-245,000 (joint).
- The Modified Adjusted Gross Income (MAGI) is for closings after 6 November 2009.
How is the credit claimed?
- The credit is claimed on when you file your taxes using Form 5405.
- Form 5405 is expected to be released 15 January 2010.
- HUD-1 Final Settlement Statement must be submitted with your tax return.
Additional IRS caveats:
- If the credit was claimed on your 2009 return, you may not file electronically.
- 2009 homebuyers must use the new form to claim the credit.
- If the credit was claimed on a 2008 return for a home purchased in 2009, and the purchaser also did not use the Feb 2009 revision of Form 5405, they may be able to claim the additional $500 on an amended 2008 tax return.
- To KEEP the Credit, you must occupy the home for 3 years (36 months).
What does this mean for the Kansas City homebuyer?
Scenario 1: Your income is $95,000 and you are married filing jointly. Your tax is $16,131, you claim 12,000 in itemized deductions. The purchase price of your home is $425,000 and you qualify for the Resale Buyer Tax Credit. You would receive a Refund in the amount of $119 instead of paying $4,131.*
Scenario 2: Your income is $45,000 and you are a single filer. Your tax is $7,444, you claim 5,700 in deductions. You are buying your first home for $150,000. You would receive a $9,744 Refund instead of a $1,744 Refund.*
Scenario 3: Your income is $86,000 and you are a single filer. Your tax is $17,807, you claim 10,000 in deductions. You are buying your first home for $192,000. You would receive a $193 Refund instead of paying $7,807.*
Scenario 4: Your income is $29,000 and you are a single filer. Your tax is $3,936, you claim 5,700 in deductions. The purchase price of your home is $48,000. You would receive a Refund in the amount of $6,500 instead of $1,764.
*These numbers are for demonstration purposes only, exact figures should be calculated by your tax person.
Specific for Kansas City homebuyers:
If you qualify for the HOPE tax incentive program, you may be eligible for an additional $1,250.
Please keep in mind that the changes in TILA last year will effect the timing of your closing.
Search for All Homes in Kansas City MO & KS - all MLS listings in Kansas City can be found here.
Home Inspectors on the Kansas side must now be registered. Be sure to use a home inspector who is on the approved list.
Thanks for stopping by! If you have any questions about the new rules, the buying process, or Kansas City Real Estate in general, just call Maria @ 816.560.3758. (or email)
Maria Morton, Realtor©, SRES, ABR
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