Here are the rules for the Home Buyer Tax Credit that went into effect November 7, 2009 and end on April 30th, 2009. For more details, go to federalhousingtaxcredit.com, a website sponsored by the National Association of Home Builders.
- First-time home buyers still get a credit of as much as 10% of the purchase price, up to a maximum $8,000. “First-time” means people, including both partners of a married couple, who haven’t owned a principal residence for three years before the purchase.
- Current home owners are eligible for up to $6,500 but must have used the home sold or being sold as principal residence consecutively for 5 of the 8 previous years.
- Contract date on or before April 30, 2010 and Settlement before July 1, 2010
- Income caps: $125,000 – Single; $225,000 – Married. Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible
Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible. - Under the new law, as under the old, 2009 home buyers may claim the credit on either their 2008 or 2009 returns, and 2010 buyers may claim the credit on either their 2009 or 2010 returns.
- The credits offer dollar-for-dollar reductions of tax and are refundable. This means that a taxpayer who doesn’t pay enough tax to offset the credit can get a refund. For example, if you qualify for an $8,000 credit but only owe $5,000 in tax, you could receive a $3,000 check from the Internal Revenue Service.
To take advantage of the tax credits, a buyer must have a contract in place before May 1, 2010, and the deal must close before July 1, 2010. No further extension is expected.
