Real Estate Insider
A Publication Of The Group, Inc.
Vol. 34, No. 1
January 2010
Federal Homeowner Tax Credit Deadline is April 30, 2010 In November the Federal Homeowner Tax Credit was expanded and extended. The tax credit was expanded to include both first-time buyers and long-time residents. The income limits were expanded to $125,000 for a single person and $225,000 for a couple. The tax credit was extended. A home must be under contract by April 30, 2010 and closed by June 30, 2010. The tax credit is $8,000 for first-time buyers and $6,500 for long-time residents. A firsttime buyer is defined as someone who has not had an interest in a principal residence for three years prior to purchase. A long-time resident is defined as someone who has used the home sold or being sold as a principal residence consecutively for five of the previous eight years. The seller of the property can be anyone except a direct relative. The buyer cannot be claimed as a dependent on someone else’s tax return. The maximum purchase price of a property is $800,000. The program is designed for primary residences as opposed to investment property. The purchaser should plan on owning the property for at least three years. If the property is sold within three years, the tax credit must be returned. A tax credit differs from a tax deduction. Qualifying purchasers under this program will have a credit toward their income taxes owed. If the income taxes owed are less than the credit, the qualifying purchaser will receive a tax refund. Qualifying purchasers simply needs to include IRS Form 5405 and the settlement statement with their tax return.
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Of course prospective buyers should seek the advice of a CPA to discuss the particulars of their own situation. The Group has just produced a Homebuyer Tax Credit Kit which includes everything a prospective buyer or seller needs to know about this program. Complimentary copies are available from your Group REALTOR®.