Here's a Great Summary of the First Time Home Buyer & Repeat Buyer Tax Credit for Missoula and Western Montana home buyers.
First Time Home Buyer & Repeat Buyer Tax Credit
QUESTIONS & ANSWERS Explained
All new first time home buyer and repeat buyer Tax Credit are effective immediately. It does not have to occur on December 1 2009 in order to qualify. All closings occurred on November 6 2009 qualifies for the new & improved first time home buyer and repeat buyer tax credit.
First Time Home Buyers
The $8,000 first time home buyer tax credit applies to home buyers that purchase homes at $80,000 or more. Anything less than $80,000, the tax credit that applies is 10% of the purchase price.
- There is NO PROVISION that stipulates that the Repeat Buyer must purchase a home more expensive than the one sold.
- There is NO PROVISION that says the Repeat Buyer must sell the home before the new one close.
- Qualifying sale of existing principal residence must be any five-consecutive year period during the eight-year period that ended on the date the replacement home is purchased.
New Income Limits
- For home purchases on or after November 6 2009, new income limits raised to Modified Adjusted Gross Income of $125,000 for a full refund and phase out adjustment up to $145,000 for single taxpayer.
- Modified Adjusted Gross Income of $225,000 and phase out adjustment up to $245,000 for married taxpayers.
Purchase by a Dependent
There was no age limitation on the original bill and amended for the November Tax Credit. Taxpayer must be at least 18 years old to qualify for the credit. For married taxpayers, the taxpayer shall be treated as meeting the age requirement if the taxpayer or spouse meets the age requirement.
There is no criteria that home buyers must "move up" in house. Only that they lived in the house for the past 5 out of 8 years as a primary residence. The new purchase price must not exceed $800,000.
Date of Enactment = November 6 2009.
For 2008 Purchases
For home purchases in 2008, the tax credit works as if it is a 15-year no-interest loan up to $7,5000. The total amount of tax credit equals 10% of home purchase price.
For 2009 Purchases
For home purchases in 2009, the tax credit is 10% of purchase price to a maximum of $8,000. On or after November 6 2009, repeat buyers qualify also.
- Applies to taxpayer's principal residence
- Reduces taxpayer's tax bill, dollar for dollar
- Is fully refundable which means if the taxpayer is eligible and owes no tax, taxpayer will receive a full refund.
When to File For This Tax Credit
First time home buyers who purchase a home in 2009 can claim the tax credit on 2008 tax return by filing for an amended return or 2009 tax return. Credit may not be claimed before closing.
The credit is claimed using Form 5405 with an original or amended tax refund.
To file an amended tax return, use Form 1040X.
FEATURE Jan 1 – November 30, 2009
Rules as enacted February 2009
December 1 – April 30, 2010
Rules as enacted November 2009
First-time Buyer – Amount of Credit $8000 ($4000 married filing separate) $8000 ($4000 married filing separate) First-time Buyer – Definition for Eligibility May not have had an interest in a principal residence for 3 years prior to purchase -Same- Current Homeowner – Amount of Credit No Provision $6500 ($3250 married filing separate) Effective Date – Current Owner No Provision Date of Enactment Current Homeowner – Definition for Eligibility No Provision Must have used the home sold or being sold as a principal residence consecutively for 5 of the previous 8 years Termination of Credit Purchases after November 30, 2009.(Becomes April 30, 2010 on Date of Enactment.) Purchases after April 30, 2010 Binding Contract Rule None Written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close Income Limits $75,000 – single, $150,000 – married, Additional $20,000 phase out $125,000 – single, $225,000 – married,
Additional $20,000 phase out
Limitation on Cost of Purchased Home None $800,000 Purchase by a Dependent No Provision Ineligible Antifraud Rule None Purchaser must attach documentation of purchase to tax return
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Realtor®/ Broker of 3:16 team REALTY
Super-serving Frisco, Plano, Dallas, McKinney, Allen, Little Elm, Prosper, Celina, Richardson, Dallas M-Streets, Dallas White Rock Lake area communities and other surrounding areas.
Copyright © 2009 by Loreena Yeo (3:16 team REALTY)
Originally Posted on Home Buyer Tax Credit Extension