Are you a first time home buyer interested in Buffalo Grove, Long Grove, Vernon Hills or any of the other Chicago Northwest Suburbs? In the past few weeks I have seen record numbers of buyers beginning the search for their first home. First time buyers can take advantage of the $8000 first time home buyer tax credit, (described below) , ideal interest rates and historically low home prices. Additionally, First-time buyers in the Chicago Northwest Suburbs are much more flexible in entering the real estate market because they aren't concerned about selling an existing home.
By now you have probably heard about the $8000 First Time Home Buyer Tax Credit (Economic Stimulus Package) available to the new buyers in the Chicago Northwest Suburbs and everywhere else for that matter.
If you are a First-Time Home Buyer, a real estate agent that works with First-Time Home Buyers or a tax accountant who is filling out someone's taxes it is important to know the details of this credit.
The below questions and answers relating to the credit apply to any new home buyer whether you live in the Chicago Northwest Suburbs or anywhere else within the United States.
What defines a First-Time Home Buyer? Buyers who purchase any home which is utilized as their primary residence (new or resale) between January 1st and November 30th. As defined, the First-Time Home Owner could not have owned a primary residence within the last 3 years. For married couples, if one of the spouses has owned property within the last 3 years, they are both disqualified. Ownership of a vacation home or rental property not used a Principal Residence does not disqualify a buyer as a first-time home owner.
Income Clarification: What is the Income Limitation to claim the Tax Credit? The homeowner's annual income can not exceed $75,000 to receive the full tax credit or $150,000 per couple to receive the full tax credit. Are you automatically disqualified because your income is above these limits mentioned? You are still qualified for the reduced refund if your MAGI (modified adjusted gross income) is above $75,000 (single) or $150,000 (married), but not above $95,000 (single) or $170,000 (married). If your income is above $95,000 (single) or $170,000 (married) then you no longer qualify.
What is MAGI? This term is defined by the IRS and is not your Adjusted Gross Income (AGI). It's a calculation of your AGI and personalized deductions. It is best to seek an accountant for a clear
Who can't claim the credit?· The person is a non-resident alien.
· The purchased home is located outside of the U.S.
· The home is sold or ceases to be the taxpayer's primary residence before the end of 2008.
· The home was inherited or a gift from someone else.
· The home was purchased from a relative. This may include a spouse, parent, grandparent, children, and grandchildren. Related parties also include corporations or partnerships in which a person owns more than 50% of the stock or receives over 50% of the profits or interest.
What does it mean that the tax credit is 'refundable'? The Good news is that its a credit and not a loan nor a deduction. Any unused portion from your 2008 or 2009 taxes will be refunded to you. . For example, if you owe the IRS $3000 in taxes, and your expected tax credit is $8000 then your net difference of $5000 will be refunded to you.
What type of home qualifies? Any home used as a primary residence. This obviously includes single-family residence, but also includes attached homes like townhomes, condos, manufactured homes, and even houseboats.
I am building a home. Would I still qualify for the credit? If you purchase the home from a home builder, then the 'settlement' date on the contract must be between 1/1/09 and 11/30/09. If you have hired a contractor to build your home, then the tax code defines the purchase date as the 1st date the homebuyer occupies the home. This date must be between 1/1/09 and 11/30/09.
How do I claim the $8000 first-time home Buyer tax credit? The claim is made on your federal income tax return. The first step is to complete form 5405
which helps determine the amount of your credit. The amount is then placed on line 69 of the 1040 form. No other approval is necessary, however, you will want to be sure you qualify based on the First Time Home Buyer guidelines and Income limitations.
Do I have to claim the tax credit in 2009 or can I claim it in 2008? The law states that the home buyers could claim this credit in either year. Someone with an adjustable income may 'elect' to claim the credit in 2008 because they know their current MAGI for 2008 where as in 2009 the MAGI may be above allowable limits. If the 2008 tax returns have been filed, see an accountant for further assistance and suggestions.
Read more: "IRS Form 5405, First-Time Home Buyer Credit: 7,500 & 8,000 Homebuyer Credits - How to Claim, Who Doesn't Qualify" - http://personal-tax-planning.suite101.com/article.cfm/irs_form_5405_firsttime_home_buyer_credit#ixzz09VLIEoJ8
The above information regarding golf and real estate was provided by Judy Greenberg, Realtor with Coldwell Banker Residential Brokerage. Judy specializes in the sale of homes to first home time buyers.. If you are seriously looking for your first home in the Chicago Northwest Suburbs of Chicago, please call Judy at 847-602-5435.
Judy's websites, www.buffalogroveareahomes.com and www.buffalogrovehomes.com and www.judygreenberg.com provide all the information regardless as to whether you are a potential buyer or seller.or lessor or lessee.
Comments(3)