As you may have heard, when the tax credit was extended for first time home buyers it was expanded to include qualified move-up or repeat home buyers purchasing any kind of home.
How do you know if you qualify? The law defines a tax credit qualified move-up home buyer (“long-time resident”) as a person who has owned and resided in the same home for at least five consecutive years of the eight years prior to the purchase date of a new home. If this is you, then the answer is, “yes.” The “purchase” date refers to the date you are under contract on a new home. This date must be no later than April 30, 2010 and you must close on your new home no later than June 30, 2010.
For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. That is, both spouses must qualify as long-time residents, with at least five years of principal residency for each.
Do I have to purchase a more expensive home to qualify? The answer is, “no.” Repeat home buyers do not have to purchase a home that is more expensive than their previous home to qualify for the tax credit.
You may have heard different figures circulating regarding the amount of the tax credit you may receive. For repeat home buyers the tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $6,500. This means that as long as you purchase a home that costs at least $65,000; you will receive the full $6,500 credit. Purchases of homes priced above $800,000 are not eligible for the tax credit.
There are some income limits for claiming the tax credit. The income limit for single taxpayers is $125,000; for married taxpayers filing a joint return the limit is $225,000. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) above those limits. For specific information regarding your MAGI, you can visit the National Association of Home Builders website related to the tax credit at www.federalhousingtaxcredit.com
Claiming the tax credit is easy. The credit is a federal income tax credit so homebuyers should complete IRS form 5405 to determine their tax credit amount. This then gets entered on line 67 of the 1040 income tax form for 2009 returns.
What kinds of homes qualify? Any home that will be used as a principal residence (meaning you will live in the home) will qualify for the credit, provided the home is purchased for a price less than or equal to $800,000. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats.
Some purchases that would not qualify are homes purchases from family members. More specifically your ancestors (parents, grandparents, etc.), your lineal descendants (children, grandchildren, etc.) or your spouse or your spouse’s family members.
For more information about how to monetize your tax credit, or receive the money immediately, rather than waiting until you file your 2009 or 2010 income taxes to receive a refund, visit the National Association of Home Builders tax credit website’s frequently asked questions page.
Lending A Hand,
Marla Wynn
Tags: tax credit
