The $8000 / $6500 Home Buyer Tax Credit is alive and well. As anticipated, President Obama signed the $8,000 first-time home buyer tax credit extension into law on Friday. You can now collect the credit if your home purchase is under contract by April 30, 2010 and is complete by June 30, 2010. The good news for current owners: The extension also offers a tax credit for people who are purchasing a new residence, but aren't first-time homeowners.
Tax Credit is Refundable
A refundable credit means that if the amount of income taxes you owe is less than the credit amount you qualify for, the government will send you a check for the difference.
For example:
- A first-time home buyer who qualifies for the full $8,000 credit who owes $4,000 in federal income taxes would pay nothing to the IRS and receive a $4,000 payment from the government
- A first-time home buyer who was to receive a $3,000 refund would receive $11,000 ($3,000 plus the $8,000 first-time homebuyer tax credit)
- A repeat buyer who owes $4,000 would pay nothing to the IRS and receive $2,500 back from the government
- A repeat buyer who was due to get a $2,000 refund would get $8,500 ($2,000 plus the $6,500 repeat buyer tax credit)
All qualified homebuyers can take the tax credit on their 2009 or 2010 income tax return.
Payback Provisions
The tax credit is a true credit. It does not have to be repaid unless the home owner sells or stops using the home as their principal residence within three years after the purchase.
Summary Details of TAX CREDIT:
- Under contract by April 30, 2010
- Close escrow by June 30, 2010
- $8,000 for 1st time buyers
- $6,500 for current homeowners who have lived in their house 5 of the past 8 years
- $125,000 individual income limit
- $225,000 joint income limit
History of the $8,000 tax credit
Detailed Tax Credit Explanation
IRS Rules about the $8,000
Calculating the Tax Credit
Put the $8,000 tax credit on line 69 of this form
No comments:
Post a Comment