You’re probably thinking more about raking leaves than taxes right now, but the first time homebuyer tax credit program expires December 1 so now’s actually a good time to think about real estate! Here’s the scoop:
If you did not own a principal residence at any time during the past three years you can receive a tax credit of up to $8,000 on either an original or amended 2008 tax return, or a 2009 return. But the purchase must close before Dec. 1.
How do you know if you qualify?
So what’s a principal residence? A principal residence is a home you own and live in, so for example if you owned a home but rented it out for the last three years, you can still qualify for this program. If, however, you lived in your own home for any of the last three years, you cannot qualify.
How do you know if the place you want to buy qualifies?
You have to live primarily in the home you are buying; you can’t buy it to rent out and you can’t buy it for a vacation home.
What income levels qualify for this program?
This incentive phases out for higher income levels: the phaseout range for couples married filing jointly is $150-$170K modified adjusted gross income, and for others, the phaseout range of $75-$95K modified adjusted gross income.
I bought a home last year under the 2008 tax credit program, how is this different?
The American Recovery and Reinvestment Act (ARRA) has extended and expanded the first-time homebuyer tax credit for 2009. In 2008 the tax credit was for only $7,500 and it had to be repaid over 15 years, but under the ARRA, the credit limit has been raised to $8,000 and does not have to be repaid. You can amend your 2008 tax return if you bought a home in 2009 to claim the $8,000 credit. You cannot amend the return if you bought the home in 2008 and claimed the $7,500 credit.
How do I get the tax credit?
You need to attach the “First time homebuyer credit” Form 5405 to your tax return to claim this deduction. You cannot claim the credit until after the closing date.
Want more info on this program?
Watch a First-Time Home Buyer Tax Credit video.
“The recovery law provides tax incentives for first-time homebuyers, people purchasing new cars, those interested in making their homes more energy efficient and parents and students paying for college," says Peggy Riley, IRS Media Relations Specialist. "But all of these incentives have expiration dates so taxpayers should take advantage of them while they can."
For more information on the Recovery Act
Visit the ARRA page on IRS.gov.
For some widgets on different provisions of the Recovery Act please see http://www.marketingexpress.irs.gov/mexpress/widgets/.
Listen to Audio Files for Podcast: Tax Breaks for 2009 & 2010 (In English and Spanish)
Next up: A look at the new car tax credit program.