When can I get my $6500? Details for grabbing that new Federal MOVE-UP Home-Buyer Tax Credit.

Reblogger Svetlana Stolyarova
Real Estate Agent with Local-n-Global Realty, Cleveland and International Real Estate Solution BRK 2007000844

 

It's a perfect up to move up for those who really need it. It's a perfect incentive for those homeowners who really deserve it.

Please read the excellent explanation of new home buyers tax credit. The only thing which I would mention is that this tax credit is not only move-UP buyers' credit. You don't need to pay more for your new home than you paid for your old one. You just need to move to a new place.

 

Original content by Jim Hale Oregon 780301468

You've just closed (or will be closing soon) on the purchase of your new home.  You've been told you're eligible* for the new $6500 fully-refundable federal

Move-Up Home-Buyer Tax Credit.


You've got just one question: 


When do I get my money?



The short answer is:
    It's up to you!

But your available options will be determined by whether the closing date of your purchase is:

Between November 7 and December 31, 2009
Or after January 1, 2010.


And you will have to keep in mind the income limitations applicable to the calendar year option you pick.


For purchases closed between November 7 and December 31, 2009, your options are:


1) Elect to File as if the purchase was made in Tax Year 2008.

Here's How:


Wait for a new November 2009 revision of Federal Tax Form 5405.

File the new Federal Tax Form 5405 to compute and claim the credit.

Attach a copy of your HUD-1 settlement form (closing statement) to that new Form 5405 as proof of the completed home purchase.

File a Federal Form 1040X (Amended Return) to amend Line 69 of your previously filed 2008 Federal Tax Return.

The IRS says to allow 3-4 months for a response to an amended return.  They regularly beat this turn-around last summer, but may take longer this winter.




2) File as if the purchase was made in Tax Year 2009.


Here's How:


After January 15, 2010:

File a 2009 Federal Form 5405 (not yet published) to claim the credit.

Attach a copy of your HUD-1 settlement form (closing statement) to Form 5405 as proof of the completed home purchase.

File your regular 2009 Federal Income Tax Form 1040 in the usual way, reporting the credit amount on Line 67.

Expect your refund on the usual timeline a few weeks after you file.





For purchases closed after January 1, 2010, your options are:


1) File as if the purchase was made in Tax Year 2009.


Here's How:


After January 15, 2010:

File a 2009 Federal Form 5405 (not yet published) to claim the credit.

Attach a copy of your HUD-1 settlement form (closing statement) to Form 5405 as proof of the completed home purchase.

File your regular 2009 Federal Income Tax Form 1040 in the usual way, reporting the credit amount on Line 67.

Expect your refund on the usual timeline a few weeks after you file.


If you purchase you home after filing your 2009 income tax return (but before the April 30 deadline to have your purchase under contract and the June 30 deadline by which the sale must close) you can elect to file a 1040X to amend 2009.



2) File as if the purchase was made in Tax Year 2010.

Here's How:


After January 15, 2011:

File a 2010 Federal Form 5405 (not yet published) to claim the credit.

Attach a copy of your HUD-1 settlement form (closing statement) to Form 5405 as proof of the completed home purchase.

File your regular 2010 Federal Income Tax Form 1040 in the usual way, reporting the credit amount on the appropriate line.

Expect your refund on the usual timeline a few weeks after you file.




Here's how you may want to decide which of those options to choose:


If you choose to file the credit for 2008, the income limits (Modified Adjusted Gross Income - MAGI) associated with the First-Time Home-Buyer credit on December 31, 2008 will apply.  Those were:

$ $75,000 for single filers
$ $125,000 for married filing jointly
.

Also applicable for 2008 will be the pro-rating/phase out of the tax credit for those having incomes just above those stated limits ($95,000 and $145,000).

If you choose to file the credit for 2009 or 2010, the income limits (Modified Adjusted Gross Income - MAGI) associated with the credit on December 31, 2009 will apply.  Those are:

$
125,000 for single filers
$ 225,000 for married filing jointly
.


Also applicable for 2009 and 2010 will be the pro-rating/phase out of the tax credit for those having incomes just above those stated limits. See you tax advisor for the details of this provision, but the bottom line is:

If the applicable income phaseout would reduce your home buyer tax credit amount in the present year and a larger credit would be available using the prior year MAGI amounts, then you can choose the year that yields the largest credit amount.

The phaseout range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $145,000 (single) or $245,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

I



*(i.e.  I've  lived in my old personal residence for five (5) out of the last eight (8) years.)

************

Jim Hale

Principal Broker

Graduate, REALTOR Institute                e-PRO
actionagents.net
1715 Linnea Avenue
Eugene, OR 97401-1962

Office:  541-484-0219
Direct:  541-543-9991
Fax:      541-485-8068

www.actionagents.net                jim@actionagents.net

Company Logo - ACTIONAGENTS.NET - Eugene, OR - Jim Hale, Principal Broker


© 2009  All Rights Reserved

 

 

 

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Rainmaker
596,893
Jim Hale
ACTIONAGENTS.NET - Eugene, OR
Eugene Oregon's Best Home Search Website

Svetlana -

You're right:  we should maybe call this the Move-ON Tax Credit...with apologies all around the left wing.

Nov 19, 2009 09:10 PM #1
Rainmaker
744,002
Norma J. Elkins
Elite Realty Group - Morristown, TN
Realtor - Elkins Home Selling Team

My question is - if they buy a permanent second home - do they have to sell the one they moved from or can they keep it for a rental income?

Nov 19, 2009 09:30 PM #2
Rainmaker
985,913
Will Nesbitt
Nesbitt Realty at Condo Alexandria - Alexandria, VA
Nesbitt Realty is a family-run brokerage.

Good stuff. Congrats on the featured post.

Nov 19, 2009 10:36 PM #3
Rainmaker
560,995
Svetlana Stolyarova
Local-n-Global Realty, Cleveland and International Real Estate Solution - Mayfield Heights, OH
Local-n-Global Realty, Broker 216-548-4663

Jim - you are right . It's better to call it a move-on tax credit. Yet we all like to work with move up buyers, all long-term homeowners who decide to make move soon may be eligible. 

Nov 20, 2009 12:30 AM #4
Rainmaker
560,995
Svetlana Stolyarova
Local-n-Global Realty, Cleveland and International Real Estate Solution - Mayfield Heights, OH
Local-n-Global Realty, Broker 216-548-4663

Norma - that's an excellent question. The answer is No, they are not required to sell. They just need to use their new property as a principle residence.

This is what IRS.gov says about it:

Q:  I’m already a homeowner. If I buy a replacement home after Nov. 6, 2009, to use as my principal residence, do I have to sell my home to qualify for the homebuyer tax credit?

A:  If you meet all of the requirements for the credit, the law does not require you to sell or otherwise dispose of your current principal residence to qualify for a credit of up to $6,500 when you buy a replacement home to use as your principal residence. The requirements are that you must buy, or enter into a binding contract to buy, the replacement principal residence after Nov. 6, 2009, and on or before April 30, 2010, and close on the home by June 30, 2010. Additionally, you 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. For example, if you bought a home on Nov. 30, 2009, the eight-year period would run from Dec. 1, 2001, through Nov. 30, 2009. (11/17/09)

http://www.irs.gov/newsroom/article/0,,id=206293,00.html

 

Nov 20, 2009 12:33 AM #5
Rainmaker
560,995
Svetlana Stolyarova
Local-n-Global Realty, Cleveland and International Real Estate Solution - Mayfield Heights, OH
Local-n-Global Realty, Broker 216-548-4663

Will - all credits to  Jim Hale for such a simple and understandable explanation.

Nov 20, 2009 12:34 AM #6
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Rainmaker
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Svetlana Stolyarova

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