$8,000 First Time Home Owner's Tax Credit

Do you know everything about the tax credit? Did you know you don’t have to be a first time homebuyer anymore? The credit is expiring soon, make sure you know what you may be missing!

From the National Association of Home Builders

March 25, 2010 – As the April 15 deadline to file 2009 federal tax returns approaches, the National Association of Home Builders (NAHB) is providing answers to some of the questions home buyers are most frequently asking about the home buyer tax credit.

“NAHB’s Web site that provides information about the home buyer tax credit, www.FederalHousingTaxCredit.com, has received more than 8 million visits,” said NAHB Chairman Bob Jones, a builder and developer in Bloomfield Hills, Mich. “We are doing everything we can to make sure home buyers are informed about this outstanding opportunity to benefit from buying a home before it expires April 30.”   

Some of the more commonly-asked questions, and the answers, include:

How does a home buyer claim the tax credit?

The credit is claimed when the home buyer files or amends their federal income taxes. For qualifying homes purchased in 2009 or 2010, the taxpayer must complete IRS Form 5405 and attach a copy of the settlement statement. In most cases, the settlement statement is a properly executed Form HUD-1.

In circumstances where a HUD-1 is not provided, such as purchasing a mobile home or a newly constructed home, the IRS will accept an executed retail sales contract (mobile homes) or a copy of the certificate of occupancy (new homes).

Does the home buyer have to sell their current home in order to qualify for the $6,500 repeat home buyer tax credit?

A home buyer does not need to sell their current home in order to be eligible for the repeat buyer credit. They can continue to own both homes, and rent or use their former home for something else, as long as it no longer serves as their principal residence. The taxpayer is required to use the new home as their principal residence, and live in it for at least 36 months, or they will have to repay the credit.

Do married couples both have to meet the eligibility requirements in order to claim the credit, even if they file taxes separately?  

Both spouses must fully meet all the eligibility requirements for either the $8,000 first-time home buyer tax credit or the $6,500 repeat buyer tax credit, regardless of if they file joint or separate tax returns. However, if an unmarried couple purchases a home and only one person qualifies, the eligible person may claim the full credit.

Do all home purchases need to be completed by April 30, 2010, in order to be eligible for the credit?

There are two exceptions to the April 30 deadline. If the buyer enters into a binding contract by the deadline, they have until June 30, 2010, to complete the purchase. The deadline has been extended a year, to April 30, 2011, for members of the uniformed services, Foreign Service or employees of the intelligence community who have been on qualified extended duty outside the United States for at least 90 days between January 1, 2009, and April 30, 2010.

NAHB’s Web site www.FederalHousingTaxCredit.com provides information including eligibility requirements for the $8,000 first-time home buyer and $6,500 repeat buyer tax credits, detailed question and answer sections, and links to additional home-buying resources for consumers.

Disclaimer: NAHB is providing this information for general guidance only. This information does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind nor should it be construed as such. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action on this information, you should consult a qualified professional adviser to whom you have provided all of the facts applicable to your particular situation or question. None of the tax information in this release is intended to be used nor can it be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.

http://www.nahb.org/news_details.aspx?newsID=10505