Knowing Homebuyer Tax Credit Inside Out

[Charles Heyward]

Recently Congress approved a legislation that will extend the first time homebuyer tax credit beyond its initial November 30 deadline and expand it to even wider group of homebuyers. Here are some facts you need to know to take advantage of the tax credit.
Eligibility to claim the tax credit:
Anyone who purchases a principal residence is eligible for the tax credit. First time homebuyers are eligible for the tax credit if they haven’t owned a home in the past 3 years. If it is a couple, both the husband and the wife may not have owned a principal residence in the past 3 years. Repeat buyers (those who are selling one home to purchase another) are eligible if they have lived in the home for 5 consecutive years, during the last 8 years.

Amount of the tax credit:
Amount of the tax credit is 10% of the purchase price up to $8000 for the first time homebuyer and $6500 for repeat buyers.

Income limits:
There are income limits for homebuyers. For a single buyer it is $125,000 to $145,000 and for a married couple it is $225,000 to $245,000.

Types of homes that qualify for the tax credit
It can be a single family home, condo, or a town house. As long you are purchasing the home as a principal residence, it qualifies you for the tax credit.

Price limit on eligible homes:
The maximum price of the home cannot exceed $800,000 in order to get a tax credit.

Claiming the tax credit:
You can claim the tax credit by filling out IRS form 5405 when you file your income tax. You can re-file past year’s income tax return and get the refund when it comes. You can also file your next year’s return and submit that form with it.

If you need any other information, do not hesitate to contact me.

Best,
Charles