The First Time Home buyer Tax Credit was Extended by the President in Novemver of 2009. This is not breaking news by any means. However, there is a lot of confusion by consumers and lenders. I guess the confusion is because H.R. 3548 was also revised or change to include current home owners.
I have the facts listed below along with points of confusion and creative thoughts you may want to avoid.
- The bill extends the present $8,000 tax credit (up to 10% of purchase price) for first-time home buyers through April 30, 2010. A first time home buyer is one that has not owned a home in the last 3 years.
- The bill has been revised to allow Current homeowners a $6,500 tax credit (up to 10% of purchase price) through April 30, provided they have lived in the home they are selling, or have sold, as principal residence for five consecutive years in the past eight years.
- The April 30th deadline is very confusing for some. If the potential home buyers have a binding contract on or before April 30th, they will have until July 1st to close the transaction.
- Income limits for eligible home buyers are expanded to $125,000 for single buyers and $225,000 for couples.
- The purchase price of the home cannot exceed $800,000. To help guard against fraud, buyers are required to attach documentation of purchase to their tax return.
- Home types include: single family home, condos, town homes, mobile homes, house boats and co-ops.
- The tax credit is not a deduction. The refund is paid to you in excess of taxes owed.
- There is no repayment required as long as you live in your new home for a minimum of 3 years.
- The HUD-1 or settlement statement/statements must be submitted with your tax return. (form 5405)
- This is important, ... you must by 18 years or older and NOT be claimed as a dependent by another tax payer.
- Don't get bitten by this provision. Your purchase CANNOT BE from a fimily member such as parents, children, siblings, or spouse.