Top 7 FAQ’s About the 2009 Home Buyer Tax Credit
The recently approved economic stimulus package includes a $8,000 maximum tax credit for first-time homebuyers in 2009. Below are the top 7 frequently asked questions (FAQ’s) about the tax credit.
1. Who is eligible for the Home Buyer tax credit?
First time home (new or used) buyers are eligible for the tax credit. You must purchase a home on or after 1/1/2009 and before 12/1/2009. Remember the purchase date is the date when you close and the title of the property transfers to you as the home owner.
2. What is the defined as a first-time home buyer?
Per U.S. laws, a first-time home buyer is a buyer who has not owned a residence during the three-year period prior to the purchase. For married taxpayers, the couple’s homeownership history has to be tested to determine if they qualify for first-time home buyer status. If one party of a married couple has owned a home within the three-year period, then the couple will not be eligible for the tax credit.
3. How is the tax credit amount calculated?
The tax credit is 10% of a house purchase price up to $8,000 maximum.
4. What are the income requirements for claiming the tax credit?
Single tax payers with a modified adjusted gross income (MAGI) of more than $75,000 and married couples with a MAGI of more than $150,000 will see a reduction in the tax credit. For single tax payers with MAGI of more than $95,000 and married tax payers over $170,000 the tax credit is zero.
5. How do I claim the first time home tax credit?
You will claim the tax credit on your federal income tax return. You well need to complete IRS Form 5405 to determine the tax credit and then claim it on Line 69 of your 1040 income tax return. It’s a pretty easy!
6. What types of homes will qualify for the tax credit?
Any home that will be used as your primary residence will qualify, which includes single-family detached homes, townhouses, condominiums, manufactured or mobile homes and houseboats.
7. What does it mean by the credit being refundable?
If the tax payer has little or no federal income tax liability that can be reduced by the credit, the IRS will send you a check for the credit.
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