The National Association of Home Builders (NAHB) has made information available for qualified home buyers about how and when to claim the $8,000 first time home buyer tax credit.
First there are basic eligibiity requirements:
1. The home must have been purchased on or after Jan 1, 2009 and before Dec 1, 2009.
2. The buyer may not have owned a home in the three years prior to the purchase.
3. The buyer must have a modified adjusted gross income less than $95,000 for single tax payers and $170,000 for married filers.
Two factors affect the amount of credit qualified buyers can claim:
1. It can only equal 10% of the purchase price of the home, up to a maximum of $8,000.
2. The credit is reduced for buyers with qualifying incomes of between $75,000 and $95,000 for single filers and $150,000 to $170,000 for married filers.
To claim the credit buyers must complete an IRS Form 5405 to calculate the amount of the tax credit and enter it on line 69 of the IRS 1040 income tax return.
Qualified buyers have several options for when to claim the tax credit, but it can only be claimed after the purchase of the home is complete. This is when the title of the property transfers. For Buyers who complete the purchase before April 15, 2009 can claim the credit on the 2008 income tax return. If the qualifying purchase will be complete shortly after the April 15th deadline an extension can be filed and the credit claimed when the 2008 taxes are filed. This must be done by October 15, 2008. Home buyers can also claim the qualified purchase on their 2009 income tax return which is filed in 2010.
If you are deciding whether to claim the credit in 2008 or 2009 take into consideration.
1. How quickly you need the refund.
2. Your expected income for 2009. If home buyers expect a salary bonus or other change in income they should calculate how the income limits may affect the tax amount.
There are no restrictions on how home buyers use the money. Some may want it quickly to pay for moving costs, home remodeling or furniture.
This post is not intended as tax advice or legal opinion and is only provided to familiarize consumers with the home buyer tax credit. A tax professional should be consulted to determine how this information applies to each home buyers particular circumstances.
If you are a new home buyer looking to purchase one of the many affordable homes in Gladwin, Michigan contact Sonya Loose today for a complete list of homes meeting your specific search criteria.