Tax Break for New Homebuyers and Current Homeowners
UPDATE: November 6, 2009 - The Federal Government has extended the popular Tax Credit issued earlier this year. This credit has made the difference in bringing new families into the housing market for Pacific Beach as well as surrounding areas. Those buyers, in turn, have reduced the inventory of unsold homes and contributed to three months in a row of increases in home prices nationwide. Here are highlights of what the amended Tax Credit includes:
 The extension will be until April 30, 2010. However, if you have a signed contract on April 30th you will still be allowed to take advantage of the tax credit as long as you have signed documents and the transaction closes within the following 60 days.
For purchases made in 2010, taxpayers will be able to claim the credit on either their 2009 or 2010 income tax return. There will be issued a new Form 5405 that must be used for all purchases after November 6, 2009.
Members of the military who have been deployed overseas for 90 days or more in 2008 or 2009 will have until April 30, 2011, to claim the home buyer tax credit.
The amendment also includes "Move-Up" Buyers as well. To qualify this way, a buyer must have owned and used the same home as a principal or primary residence for at least five consecutive years of the eight-year period ending on the date of purchase of a new home as a primary residence. The amount of the Tax Credit for Move Up Buyers will be $6,500.
Income levels will also be increased to $125,000 for single return and $225,000 for joint return.
The cost of the home price may not exceed $800,000 in order to be eligible for the credit.
They have also improved ways to stop some of the fraud that has unfortunately been happening as well. There will be an age limit of 18 years or older, no dependents will be allowed to buy a home and you will need to provide documented proof in order to receive the credit.
This information was in part gathered from CNBC.com and the US Treasury Department Press Release.
Original
The IRS announced Feb. 25, 2009, in compliance with the American Recovery and Reinvestment Act of 2009 that first-time home buyers who purchase a principal home after January 1, 2009 and before December 1, 2009, can receive up to an $8,000 credit. The tax credit can be claimed on a buyer's 2008 or 2009 federal tax return.
You are considered to be a first-home buyer homebuyer if you, and your spouse, did not own any other principal home during the three-year period ending on the date of purchase.
You can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately.
If the home purchase closed after April 15, a taxpayer can still claim the credit on a 2008 tax return by requesting an extension of time (up to 6 months) to file or filing an amended return.
Unlike the 2008 tax credit, you will not have to repay the credit, provided the home remains their principal place of living for 36 months after the purchase date.
The full amount of the credit is available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). The credit will phase out above those caps ($95,000 and $170,000).
Qualified property includes any single family residence either detached or attached.
If, for any reason your home is sold within three years of purchase, the entire amount of the credit is recaptured on the sale.
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