First Time Homebuyer Tax Credit
Can you still get $8000- for the 1st time homebuyer tax credit on your tax return?
UPDATE: this credit is not available anymore for most people.
Service members like US Military, Intelligence Community or Foreign Service, who were on official extended duty outside the United States for at least 90 days between Jan.1, 2009 and May 1, 2010, may qualify for a one-year extension of the homebuyer credit.
If the above criteria pertains to you and you purchased a home until April 30, 2011 (Or July 1, 2011 if they entered a binding contract by May 1, 2011)you can still file the home buyer credit on your 2011 tax return using the form 5405.
Although the new home buyer tax credit expired on September 30, 2010, if you bought a new home until that date you might still be eligible to get an $8000- tax credit on your 2010 tax return.
The federal government awarded cash to first time homebuyers in an effort to boost the declining housing market. First it was $7500- which was really a no-interest loan which needs to be repaid in 15 years. Later it was upgraded to an $8000- credit for First-time Homebuyers and a $6500- credit for Long-time Homeowners that does not have to be repaid.
Who can still claim the homebuyer tax credit on their 2010 tax return?
2010 home purchases that were made before April 30, 2010 or entered a binding contract before April 30, 2010 and was purchased before September 30, 2010 can qualify for the homebuyer credit for 2010.
Since you were able to get the homebuyer tax credit for homes bought in 2010 on your 2009 tax return, people who have done so cannot get this credit in 2010, of course, even if they had a qualifying 2010 home purchase.
What is the difference between a first time homebuyer and a long-time homeowner?
You qualify as a first time homebuyer if you haven't owned your principal residence during the three years before you purchase the new home.
To qualify as a long-time homeowner you have to have owned and used the same home as your main home for at least five consecutive years during the last eight years ending on the date you buy your new home.
Here are some important points that you need to know before you claim the homebuyer tax credit:
- The credit is not really $8000- (or $6500-) it is 10% of the purchase price OR $8000- ($6500-) whichever is smaller.
- There is a limit to the amount of income you are allowed to have to qualify for this credit. The credit starts phasing out at $125,000 ($225,000- for married filing joint) and those earning $145,000- ($245,000- MFJ) or more do not qualify for the credit at all.
- The purchase price of the home must be under $800,000- to qualify.
- You cannot purchase the home from a relative
- You must use the home as your principal residence. If you convert the home to a business or a rental property or if you sell the home within 36 months of the purchase you must repay the credit.
- In a case of selling the home to an unrelated person the repayment of the credit is limited to the amount of money gained at the sale. If the home is sold at a loss (including through foreclosure) no credit needs to be paid back.
If you got the original $7500- homebuyer tax credit you have to start repaying it on the 2010 tax return. The payments are $500- a year for the next 15 years and it gets paid as a tax.
Go from Homebuyer Tax Credit to Home Tax Credit
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