Home Buyer Tax Credit

As part of the Economic Stimulus Bill signed by President Obama in February 2009, the First-time Home Buyer Tax Credit has been extended and also expanded as of November 2009.

General Information for the Home Buyer Tax Credit

  • applies to sales occurring on or before April 30, 2010. A binding sales contract must be signed by April 30, 2010 and must close by June 30, 2010.
  • single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.
  • available only to homes priced at $800,000 or less.
  • does not have to be repaid unless the home is sold or ceases to be used as the buyer’s principal residence within three years after the initial purchase.
  • taxpayers have the option of claiming the credit on either their 2009 or 2010 return.
  • once claimed it reduces a taxpayer's tax bill or increases his or her refund.
  • it is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.
  • it is claimed using Form 5405, which you file with your original or amended tax return.
  • consult with your CPA or tax professional for details specific to your situation.

$8,000 First-time Home Buyer Tax Credit

  • for first-time home buyers only. The IRS defines a first-time home buyer as someone who has not owned a principal residence during the three-year period prior to the purchase.
  • equal to 10 percent of the home’s purchase price up to a maximum of $8,000.

$6,500 Repeat Home Buyer Tax Credit

  • buyers must have owned and lived in their previous home for five consecutive years out of the last eight years.
  • equal to 10 percent of the home’s purchase price up to a maximum of $6,500.

Tax Credit Restrictions

  • the home cannot be bought from a blood relative - spouse, parent, grandparent, child or grandchild.
  • the home is not your principal residence.
  • the home cannot be sold before the end of the year.
  • if you are a nonresident alien you do not qualify.
  • dependants cannot claim the credit.
  • taxpayers under the age of 18 cannot claim the credit.
  • homes costing over $800,000 do not qualify.

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