A Complete Guide to  Qualifying for and Understanding the First Time Homebuyer Tax Credit H.R. 3221 – Economic Stimulus an...
The $7,500 First Time Homebuyer Tax Credit <ul><li>The original tax credit was introduced with H.R. 3221 - The Economic St...
The $8,000 First Time Homebuyer Tax Credit <ul><li>H.R.1-The American Recovery and Reinvestment Act  revises  the First Ti...
IRS Guidelines - Qualifying for the Tax Credit <ul><li>Occupancy and Property Type </li></ul><ul><li>Must purchase a “main...
IRS Guidelines - Qualifying for the Tax Credit <ul><li>Maximum income limits – Phase out maximums </li></ul><ul><li>Marrie...
IRS Guidelines - Qualifying for the Tax Credit <ul><li>You Cannot Claim Tax Credit if any of these apply </li></ul><ul><li...
IRS Guidelines - Qualifying for the Tax Credit <ul><li>Claiming the First Time Homebuyer Credit </li></ul><ul><li>IRS Form...
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Understanding the First Time Homebuyer Tax Credit

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In "A Complete Guide to Understanding the First Time Homebuyer Tax Credit reviews the $7,500 tax credit as well as the revisions signed into law on February 17th as part of H.R.1 - The American Recovery and Reinvestment Act of 2009

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Understanding the First Time Homebuyer Tax Credit

  1. 1. A Complete Guide to Qualifying for and Understanding the First Time Homebuyer Tax Credit H.R. 3221 – Economic Stimulus and Housing Recovery Act of 2008 - $7,500 H.R. 1 – American Recovery and Reinvestment Act of 2009 - $8,000 Revised
  2. 2. The $7,500 First Time Homebuyer Tax Credit <ul><li>The original tax credit was introduced with H.R. 3221 - The Economic Stimulus and Housing Recovery Act of 2008 </li></ul><ul><li>10% of the Purchase Price up to $7,500 for single and joint taxpayers </li></ul><ul><li>Married filing separate may claim $3,750 </li></ul><ul><li>Purchased between April 8 th 2008 and before July 1 st 2009 </li></ul><ul><li>Interest Free loan paid back over 15 years beginning 2 years after credit is claimed </li></ul><ul><li>Purchase loans using by Mortgage Revenue Bonds are ineligible for credit - CalHFA </li></ul>
  3. 3. The $8,000 First Time Homebuyer Tax Credit <ul><li>H.R.1-The American Recovery and Reinvestment Act revises the First Time Homebuyer Tax Credit </li></ul><ul><li>10% of the Purchase Price up to $8,000 for single and joint taxpayers </li></ul><ul><li>Married filing separate may claim $4,000 </li></ul><ul><li>Purchased after December 31 st 2009 and before December 1 st 2009 </li></ul><ul><li>Not paid back – No recapture if home is lived in as main home for at least 3 years </li></ul><ul><li>Purchase loans using Mortgage Revenue Bonds are eligible for Homebuyer Credit - CalHFA </li></ul>
  4. 4. IRS Guidelines - Qualifying for the Tax Credit <ul><li>Occupancy and Property Type </li></ul><ul><li>Must purchase a “main home” – Primary residence </li></ul><ul><ul><li>Main home - Your main home is the one you live in most of the time. It can be a house, houseboat, housetrailer, cooperative apartment, condominium, or other type of residence </li></ul></ul><ul><ul><li>New construction – Purchase date treated as first date you occupy home </li></ul></ul><ul><li>Must be a First Time Homebuyer </li></ul><ul><ul><li>Can not have owned another primary home within 3 years of the closing date of new home </li></ul></ul><ul><ul><li>May own other homes or properties as long as you have never lived in it as your main home </li></ul></ul>
  5. 5. IRS Guidelines - Qualifying for the Tax Credit <ul><li>Maximum income limits – Phase out maximums </li></ul><ul><li>Married filing joint - $150,000 – Eligible for full credit </li></ul><ul><ul><li>Phase out begins when MAGI exceeds limit – reduce credit </li></ul></ul><ul><ul><ul><li>Phase out at $195,000 </li></ul></ul></ul><ul><li>Single filing status - $75,000 – Eligible for full credit </li></ul><ul><ul><li>Phase out begins when MAGI exceeds limit – reduce credit </li></ul></ul><ul><ul><ul><li>Phase out at $95,000 </li></ul></ul></ul><ul><li>Occupying home as Joint Tenants </li></ul><ul><ul><li>If you purchase home under joint tenancy and down payment and ownership are not equal </li></ul></ul><ul><ul><ul><li>Tax credit will be claimed in proportion to ownership in residence </li></ul></ul></ul>
  6. 6. IRS Guidelines - Qualifying for the Tax Credit <ul><li>You Cannot Claim Tax Credit if any of these apply </li></ul><ul><li>Your modified adjusted gross income (MAGI) exceeds phase out income maximum limits </li></ul><ul><li>You are a nonresident alien </li></ul><ul><li>Your home is located outside the United States </li></ul><ul><li>You sell the home, or it ceases to be your main home before the end of 2009 </li></ul><ul><ul><li>Recapture applicable if you sell within 3 years of purchase </li></ul></ul><ul><li>You acquired your home through gift or inheritance </li></ul><ul><li>You acquired your home from a related person: </li></ul><ul><ul><li>Spouse, ancestors (parents, grandparents,etc.) </li></ul></ul><ul><ul><li>Lineal descendants (children, grandchildren, etc.) </li></ul></ul><ul><ul><li>A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock of the corporation. </li></ul></ul><ul><ul><li>A partnership in which you directly or indirectly own more than 50% of the capital interest or profits interest </li></ul></ul>
  7. 7. IRS Guidelines - Qualifying for the Tax Credit <ul><li>Claiming the First Time Homebuyer Credit </li></ul><ul><li>IRS Form 5405 – Attached to 1040 </li></ul><ul><li>A main home purchased in 2008 is only eligible for $7,500 tax credit and may be claimed on 2008 return </li></ul><ul><li>A main home purchased in 2009 is eligible for $8,000 tax credit and may be claimed on 2008 (or amended 2008) or 2009 tax return </li></ul><ul><li>CANNOT claim the credit prior to purchase of home </li></ul><ul><ul><li>5404 required address of home qualifying for the credit </li></ul></ul><ul><ul><li>5404 requires date home acquired </li></ul></ul><ul><ul><li>Lying on tax return is a federal offense – not worth it </li></ul></ul><ul><li>You may adjust your W4 withholdings in anticipation of claiming credit on 2009 tax return </li></ul>
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