Veteran Borrowers: Don’t Miss The $8,000 Homebuyer's Tax Credit!

For certain members of the military, and for certain federal employees, there's just 2 months remaining to use the federal home buyer tax credit.

Eligible persons include members of the uniformed services, members of the Foreign Service, and intelligence community employees who served at least 90 days of qualified, extended duty service outside of the United States between January 1, 2009 and April 30, 2010.

Spouses of persons meeting the above criteria are eligible as well. The federal home buyer tax credit ranges up to $8,000 for first-time home buyers, and up to $6,500 for existing homeowners.

Existing homeowners must have lived in their "main home" through 5 of the last 8 years to be eligible.

How To Claim Veteran Homebuyer’s Tax Credit

Claiming the federal tax credit is a two-step process. First, eligible persons must be under contract for a new home on or before April 30, 2011.  The home's closing must then occur on or before June 30, 2011. The IRS does not make date exceptions. Furthermore, both the buyer(s) and the subject property must meet certain minimum eligibility requirements:

• The home may not be purchased from a parent, spouse, or child
• The home may not be purchased from an entity in which the seller is a majority owner
• The home may not be acquired by gift or inheritance
• Each buyer must meet tax credit eligibility standards
• The home sale price may not exceed $800,000
• Buyers may not earn more than $125,000 as single-filers; $225,000 as joint-filers

The complete program description is published on the IRS website. Another important note is that the IRS is giving eligible buyers a tax credit as opposed to a deduction.  This means that a taxpayer qualifying for the full $8,000, and for whom the "normal" 2011 federal tax liability is $8,000, will have zero federal tax liability in 2011. For additional information regarding your tax credit eligibility, call an accountant. Speaking with a tax professional is often worth the cost.