As part of the American Recovery and Reinvestment Act of 2009, a new tax credit will allow first-time home buyers to claim up to $8,000. Unlike the tax credit plan of last year (which allowed an interest-free tax “loan” of $7,500), this one doesn’t have to be paid back.
Qualifying homes must be purchased between Jan. 1, 2009, and Dec. 1, 2009. “Purchased” means that you actually close on the home, with settlement completed and title transferred to you.
The credit is 10 percent of the purchase price, with a cap of $8,000.
Any type of home can qualify, whether it’s a resale, a new one, one you have constructed, a condo, a mobile home, single family or townhouse.
“First-time buyers” are those who haven’t owned a principal residence during the previous three years. A principal residence is one where you live more than half the time. Owning a vacation home won’t disqualify you, as it’s a place you stay sometimes, but not where you live.
There are income caps: If you’re single, income cannot exceed $75,000. For married couples, that amount is $150,000. Depending on your modified gross income, there is a phase-out of the credit amount near the top of the income range.
To keep the credit, you need to live in the home (use it as your principal place of residence) for three years. If you sell the home, you have to pay back the full credit.
Use IRS Form 5404 to claim your credit when you file. Beware: The form is for both the old ($7,500) and new ($8,000) credits. Read the form carefully as you fill it out. That credit amount is then transferred to your Form 1040.
If you qualify for the full $8,000, but don’t owe that much in taxes, you’ll end up with a credit at the bottom of your Form 1040, and a check for the balance will be sent to you from the Internal Revenue Service.
If you bought a home and qualified under the $7,500 pay-back scenario and filed your 2008 tax forms, you can file an amendment to your taxes (Form 1040X) to claim the new credit. Look online for IRS news release 2009-27 for details.
Uffington does not personally answer reader questions, but will incorporate them into his column whenever possible. Write to him in care of King Features Weekly Service, P.O. Box 536475, Orlando, FL 32853-6475, or send e-mail to columnreply@gmail.com.
Qualifying homes must be purchased between Jan. 1, 2009, and Dec. 1, 2009. “Purchased” means that you actually close on the home, with settlement completed and title transferred to you.
The credit is 10 percent of the purchase price, with a cap of $8,000.
Any type of home can qualify, whether it’s a resale, a new one, one you have constructed, a condo, a mobile home, single family or townhouse.
“First-time buyers” are those who haven’t owned a principal residence during the previous three years. A principal residence is one where you live more than half the time. Owning a vacation home won’t disqualify you, as it’s a place you stay sometimes, but not where you live.
There are income caps: If you’re single, income cannot exceed $75,000. For married couples, that amount is $150,000. Depending on your modified gross income, there is a phase-out of the credit amount near the top of the income range.
To keep the credit, you need to live in the home (use it as your principal place of residence) for three years. If you sell the home, you have to pay back the full credit.
Use IRS Form 5404 to claim your credit when you file. Beware: The form is for both the old ($7,500) and new ($8,000) credits. Read the form carefully as you fill it out. That credit amount is then transferred to your Form 1040.
If you qualify for the full $8,000, but don’t owe that much in taxes, you’ll end up with a credit at the bottom of your Form 1040, and a check for the balance will be sent to you from the Internal Revenue Service.
If you bought a home and qualified under the $7,500 pay-back scenario and filed your 2008 tax forms, you can file an amendment to your taxes (Form 1040X) to claim the new credit. Look online for IRS news release 2009-27 for details.
Uffington does not personally answer reader questions, but will incorporate them into his column whenever possible. Write to him in care of King Features Weekly Service, P.O. Box 536475, Orlando, FL 32853-6475, or send e-mail to columnreply@gmail.com.