Q. What is the credit?
A. The first-time homebuyer credit is a new tax credit included
in the recently enacted Housing and Economic Recovery Act of
2008. For homes purchased in 2008, the credit operates like
an interest-free loan because it must be repaid over a 15-year
period.
The credit was expanded in 2009 for homes purchased in 2009,
increasing the amount of the credit and eliminating the requirement
to repay the credit, unless the home ceases to be your principal
residence within the 36-month period beginning on the purchase
date.
Q. How much is the credit?
A. The credit is 10 percent of the purchase price of the home,
with a maximum available credit of $7,500 ($8,000 if you purchased
your home in 2009) for either a single taxpayer or a married
couple filing a joint return, but only half of that amount for
married persons filing separate returns. The full credit is available
for homes costing $75,000 or more.
Q. Which home purchases qualify for the first-time homebuyer
credit?
A. Any home purchased as the taxpayer’s principal
residence and located in the United States qualifies.
You must buy
the home after April 8, 2008, and before Dec. 1, 2009,
to qualify
for the credit. For a home that you construct, the
purchase date is considered to be the first date you occupy
the
home.
Taxpayers (including spouse, if married) who owned a
principal residence at any time during the three years
prior to the date
of purchase are not eligible for the credit. This means
that you can qualify for the credit if you (and your
spouse, if married)
have not owned a home in the three years prior to a purchase.
If you make an eligible purchase in 2008, you claim the
first-time homebuyer credit on your 2008 tax return.
For an eligible purchase
in 2009, you can choose to claim the credit on either
your 2008 or 2009 income tax return.
Q. Can I apply for the credit if I bought a vacation
home or rental property?
A. No. Vacation homes and rental property do not qualify
for this credit.
Q. Who is considered to be a first-time homebuyer?
A. Taxpayers who have not owned another principal residence
at any time during the three years prior to the date
of purchase.
Q. When do I have to buy a new home
to get the credit?
A. The home must be purchased after April
8, 2008,
and before Dec. 1, 2009, in order to obtain
the credit. For
a home you construct,
the purchase date is considered to be the date
you first occupy the home.
Q. How do I apply for the credit?
A. The credit is claimed on new IRS Form 5405, First-Time Homebuer
Credit, and filed with your 2008 or 2009 federal income tax
return.
Q. Are there income limits?
A. Yes. The credit is reduced or eliminated for higher-income
taxpayers. The credit is phased out based on your modified
adjusted gross income (MAGI). For a married couple filing
a joint return, the phase-out range is $150,000 to $170,000.
For other taxpayers, the phase-out range is $75,000 to $95,000.
This means that the full credit is available for married
couples
filing a joint return whose MAGI is $150,000 or less and
for other taxpayers whose MAGI is $75,000 or less.
Q. I purchased a home that qualifies for the first-time
homebuyer credit. I will be renting two of the bedrooms
and reporting
the rental income on Schedule E. Will I still qualify
for the credit if I use the home as my principal residence?
A. Yes, if you meet all first-time homebuyer eligibility
requirements. See Form 5405, First-Time Homebuyer Credit,
for more details.
Q. If two unmarried people buy a house together, how
do they determine how much each may take of the
credit?
A. IRS Notice 2009-12 provides guidance for allocating
the first-time homebuyer credit between taxpayers
who are not
married.
Q. I am a single co-owner of a home. How do I get
this credit?
A. Depending on the year of purchase, you will
claim the credit on either your 2008 or 2009
federal income
tax return.
Q. I don’t owe taxes and/or my income
is exempt from tax and I do not have a
filing requirement.
Do I qualify
for the credit?
A. The credit is fully refundable and,
if you qualify as a first-time homebuyer,
having tax-exempt
income
will not
preclude
eligibility. Although there are maximum
income limits for qualifying first-time
homebuyers,
there are no
minimum income
criteria.
Thus, someone with no taxable income who
qualifies as a first-time homebuyer may
file for the
sole purpose of claiming the credit
for a refund.
Q. I plan to build a home and occupy it
in 2009. Can I claim the first-time
homebuyer credit now
and use
the funds toward
the down payment or other ongoing construction
costs?
A. No. To qualify for the first time
home buyer credit, the residence must
be purchased.
By
statute, a residence
which
is constructed by the taxpayer is treated
as purchased on the date the taxpayer
first occupies
the residence.
(05/06/09)
Q. I am in the process of buying a
home. I expect to close the deal
before December
1,
2009. Can
I claim
the first-time
homebuyer credit now? That would
allow me to use the refund for a down payment.
A. No. You may not claim the credit
in anticipation of a purchase
that has yet
to happen. Until
you have finalized
the purchase
of your home, which for most
purchasers occurs at the time of the closing,
you do not qualify
for the credit.
IRS news
release 2009-27, First-Time Homebuyers
Have Several Options to Maximize
New Tax Credit,
contains details
for filing options
if the home is purchased after
April 15, 2009.
Q. A qualifying taxpayer bought
a home in August 2008 that needed
a lot
of work
before
occupying.
They finished
the
renovations and moved in the
home in January 2009. Can they claim
the $8,000,
since they did not occupy the
home until
2009?
A. No. Taxpayers
who purchase an existing home and renovate the
property before
moving in
are eligible
for the first-time
homebuyer credit based on the
date of purchase, not the date of occupancy.
Q. What is considered your main home?
A.Your
main home is the one you live in most of the
time. It can
be a house,
houseboat,
housetrailer
( regardless
of whether it is on
a foundation or not, it could
be parked in a court),
cooperative apartment, condominium, or
other type
of residence.
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