Did you purchase a home in 2009 or 2010? If so, you may be eligible for the first-time home buyer tax credit, as defined in Internal Revenue Service (IRS) Form 5405. These are the requirements:
* You have to have not owned a principal residence in the last three years before this purchase. If you’re married, your spouse also must not have owned a principal residence in the last three years before this purchase. A principal residence, by the way, need not be a conventional house. It could be a mobile home, condominium, townhouse, houseboat, etc.
* You have to purchase the home between January 1, 2009 and April 30, 2010. Paying someone to build a house on land you already own counts. If the final contracts are signed by April 30, 2010, even if the closing isn’t until as late as September 30, 2010, that counts.
* The purchase may not be from a close relative of you or your spouse.
* The purchase price of the home cannot exceed $800,000.
* For purchases from January 1, 2009 to November 6, 2009, in order to qualify for the full tax credit, your income may not exceed $75,000 ($150,000 for couples filing jointly). For purchases from November 7, 2009 to April 30, 2010, in order to qualify for the full tax credit, your income may not exceed $125,000 ($225,000 for couples filing jointly). You are eligible for a partial credit depending on how narrowly you miss these limits.
OK, so let’s say you fulfill all these requirements and you’re eligible. How much do you get?
The tax credit is 10% of the purchase price. The credit is capped at $8,000.
Here are some more tips worth being aware of:
* You have some flexibility in deciding which year to claim the tax credit, which can be quite a benefit, given that your tax situation can differ from year to year and it might be more advantageous to take the credit one year rather than another. Indeed, you might be eligible for it one year and not another.
For an eligible purchase that occurred in 2009, you can claim the credit on either your 2008 or 2009 taxes. For purchases that occur in 2010 (up to the April 30 deadline), you can claim the credit on either your 2009 or 2010 taxes.
This also applies to amended returns. If you have an eligible 2010 purchase and you’d prefer to put it on your 2009 taxes (which presumably you’ve already filed) rather than your 2010 taxes, you can file an amended 2009 return
* If the tax credit exceeds the amount of tax due, the difference will be issued as a refund. So don’t worry about taking the credit in a year where you aren’t paying enough in taxes to offset it.
* The dates are subject to change if the law is extended, or if other laws are passed providing such tax relief for home buyers. So you’re not necessarily out of luck if your purchase does not fall within the range specified here.
For more details, be sure to check with the IRS or a qualified tax professional.