Theresa Stevens - Colorado Springs REALTOR® - Red Rock Realty
Home Financing and Mortgage Information
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I've heard a lot of hubbub about an $8,000 credit for first-time home buyers, but what is it?
- The American Recovery and Reinvestment Act of 2009 authorizes a tax
credit of up to $8,000 for qualified first-time home buyers purchasing
any kind of home-new or resale- as a principal residence on or after
January 1, 2009 and before December 1, 2009 are eligible. For the purposes
of the tax credit, the purchase date is the date when closing occurs
and the title to the property transfers to the home owner.
The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter.
Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.
The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000. The income limit for single taxpayers is $75,000; the limit is $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The phaseout range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.
Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on line 67 of the 1040 income tax form for 2009 returns (line 69 of the 1040 income tax form for 2008 returns). No other applications or forms are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests. Note that you cannot claim the credit on Form 5405 for an intended purchase for some future date; it must be a completed purchase.
It is important to note that you cannot purchase a home from your ancestors (parents, grandparents, etc.), your lineal descendants (children, grandchildren, etc.) or your spouse. Information provided by The Federal Housing Tax Credit.
For more information about the tax credit visit: http://www.federalhousingtaxcredit.com.
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Please verify any Colorado Springs real estate information with Red Rock Realty. Colorado Springs Realtor®