- Any home that is purchased for $80,000 or more qualifies for an $8,000 tax credit.
- If the house costs less than $80,000, the credit will be 10% of the cost.
- It is available for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009.
- Only first-time homebuyers are eligible.
- A person is considered a first time buyer if they have not had ownership interest in a home in the three previous years to the day of the 2009 purchase.
- Every dollar of a tax credit reduces income taxes by a dollar. Credits are claimed on the individual's income tax return.
This tax is a 'refundable' credit. Therefore, if the eligible purchaser's total tax liability was $6,000, the IRS would send the purchaser a check for $2,000.
Eligibilty:
- Individuals filing Form 1040 as Single or Head of Household, are eligible for the credit if their income is no more than $75,000.
- Married couples filing a joint return may have income of income of no more than $150,000.
- There is no pre-purchase authorization, application or other approval process.
All eligible purchasers simply claim the credit on their IRS 1040 tax return.
The credit will be reflected on a new Form 5405 that will be attached to the 1040. It can be found at http://www.irs.gov
That is the thumb-nail sketch, obviously any scenario discussions should be forwarded to the IRS or your accountant.
Hope this was helpful.
Cindy