Items To Bear In Mind Regarding Tax Credits And Purchasing A Home
Posted on August 5, 2010
Filed Under Taxes | Leave a Comment
The Worker, Homeownership, and Business Assistance Act of 2009 was an attempt to motivate the moribund market, and offers new home buyers a tax credit. This credit is generally around ten percent of the cost, up to a total of $8,000.
To qualify as a new home buyer, you cannot have owned your main place of residence for three years before this purchase. If you are married, this includes both partners.
Taxpayers’ dependents and those younger than 18 years of age are not eligible for the tax credit program. Also, the tax credit is applicable only to homes not more than $800,000, and will be paid back if the property is sold or once it is no longer the buyer’s principal home within three years after it was acquired.
Income limits of $75,000 for individual taxpayers and $150,000 for married or joint filers are eligible for the refundable tax credit if the primary residence was purchased between 01 January 2009 and 06 November 2009. Tax credit also applies to those with income not exceeding $125,000 for single taxpayers and $225,000 for married couples if the home was purchased between 06 November 2009 and 30 April 2010.
There are some forms to be completed and documentation needed to claim the tax credit. Buyers should complete the IRS Form 5405 and attach to this form a copy of the HUD-1 settlement form.
Where the HUD-1 is not applicable, a copy of the certificate of occupancy can be used in its place. For homes purchased in 2010, buyers can choose to claim refund on either the 2009 or 2010 tax return.
If you want to receive the tax credit, you need to have bought the place on or after the 01st of January 2009 and on or before the 30th of April 2010. If your binding sales contract was signed by 30 April 2010, your transaction must be completed before the 30th of June 2010.
Recently, there have been proposals for an extension of the deadline to close the transaction be moved to 30 September 2010. According to various realtor groups, the tax credit has created a rush to buy homes, which in turn created a big backlog in completing sales.
The individual has been blogging on tax relief for the previous four years. Moreover, this writer enjoys blogging regarding NYC real estate topics, including Midtown apartments as well as Sutton Place apts.
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