Friday, December 18, 2009
12/18/2009 04:36:00 PM | Posted by
Arbor Mortgage
Prospective home buyers have a unique opportunity under the newly expanded government tax credit program. First time and repeat home buyers can gain up to 10% of the home’s purchase price as a refundable tax credit. First time buyers can claim up to a maximum of $8000, while repeat buyers are limited to a maximum of $6500. A refundable tax credit is a credit that can be claimed on income taxes even if the taxpayer has little to no federal income tax to offset.
Each credit has its own qualifications. Below is a list of key points to help you determine if you may qualify.
- The refundable tax credit of up to $8000 is available for first time home buyers (anyone who hasn’t owned a principal residence in the last 3 years) purchasing a primary residence before April 30, 2010. In the case where a legal sales contract has been executed by April 30, 2010, the purchase would only have to be completed by June 30, 2010.
- The refundable tax credit of up to $6500 is available for repeat home buyers who have owned a home for at least 5 consecutive out of the last 8 years. This tax credit only applies to homes sold between November 6, 2009 and April 30, 2010. In the case where a legal sales contract has been executed by April 30, 2010, the purchase would only have to be completed by June 30, 2010.
- The income limits enacted on November 6, 2009 require a single home buyer to make less than $125,000 per year and for married couples filing jointly to make less than $225,000 per year to receive the full credit.
- If you currently make more than the income limits, a partial credit may be available. See the IRS website or speak to a tax professional for more information.
- Any home type that will be used as a primary residence will qualify, but the home must be priced under $800,000 in order to claim either credit. New home builds also qualify for the credits, but the settlement must be completed by April 30, 2010.
- Purchases must be made from an uninterested third party. Purchases from relatives of the buyer or buyer’s spouse will not qualify for the credit.
- Married couples can only claim the first time home buyer credit if both spouses qualify. They may be eligible for the repeat home buyer credit, though.
- Neither tax credit has to be repaid, unless the home is sold or is no longer used as the buyer’s primary residence with the first 3 years of purchase. Qualified service members may be exempt from this requirement.
- To claim either credit, taxpayers must submit a copy of the HUD-1 settlement statement and IRS Form 5405. Home purchases made in 2010 can be claimed on an amended 2009 tax return. See a tax professional for more details.
The above information is for general use only and should not be construed as professional tax, legal or accounting advice. This information is no substitute for professional tax or legal advice and a professional should be consulted before making any decisions. This information is provided as-is and no warranties or guarantees are made as to the completeness, accuracy or timeliness of the information.
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- Arbor Mortgage
- Arbor Mortgage is a Michigan based mortgage lender that has been providing mortgage solutions for more than a decade. Since 1998, Arbor Mortgage has helped more than 20,000 people purchase or refinance their homes. Arbor offers a variety of mortgage programs including FHA, USDA Rural Development, VA, Conventional and Alternative loans.
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