The recently enacted first-time home buyer tax credit has been made retroactive to January 1, 2009. The repayment feature has been eliminated for 2009 purchasers and the credit amount has increased to $8000.
Here are some basic rules of the credit:
- It is available to first-time home buyers only, but that means people who have not owned a home in the past three years. The home must be the principal residence and there is a recapture provision if one moves out or sells before three years.
- It is limited by income and starts to phase out for individuals at $75,000 and couples filing jointly at $150,000. Consult your tax professional for more details.
- It expires on November 30, 2009. For existing home buyers, you must close by that date; for new construction buyers, you must occupy by that date.
- It is not available directly at the closing table.
- A new home buyer does not need to wait until 2010 to claim the credit. It may be claimed on their 2008 taxes by filing an amended return after they close on their home. The credit is 10% of the price of the home or $8000, whichever is less. If more than one eligible person is making the purchase, the credit must be divided. In other words, it is up to $8000 per home purchased, not first-time home buyer.
- There aren’t any restrictions on the type of home, even houseboats are included; however, one cannot purchase a home from a close relative.
Home buyers should consult with their tax professionals to ensure eligibility for the credit and the proper way to claim it.
