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

The $7,500 First Time Homebuyer Tax Credit The original tax credit was introduced with H.R. 3221 - The Economic Stimulus and Housing Recovery Act of 2008 10% of the Purchase Price up to $7,500 for single and joint taxpayers Married filing separate may claim $3,750 Purchased between April 8 th 2008 and before July 1 st 2009 Interest Free loan paid back over 15 years beginning 2 years after credit is claimed Purchase loans using by Mortgage Revenue Bonds are ineligible for credit - CalHFA

The original tax credit was introduced with H.R. 3221 - The Economic Stimulus and Housing Recovery Act of 2008

10% of the Purchase Price up to $7,500 for single and joint taxpayers

Married filing separate may claim $3,750

Purchased between April 8 th 2008 and before July 1 st 2009

Interest Free loan paid back over 15 years beginning 2 years after credit is claimed

Purchase loans using by Mortgage Revenue Bonds are ineligible for credit - CalHFA

The $8,000 First Time Homebuyer Tax Credit H.R.1-The American Recovery and Reinvestment Act revises the First Time Homebuyer Tax Credit 10% of the Purchase Price up to $8,000 for single and joint taxpayers Married filing separate may claim $4,000 Purchased after December 31 st 2009 and before December 1 st 2009 Not paid back – No recapture if home is lived in as main home for at least 3 years Purchase loans using Mortgage Revenue Bonds are eligible for Homebuyer Credit - CalHFA

H.R.1-The American Recovery and Reinvestment Act revises the First Time Homebuyer Tax Credit

10% of the Purchase Price up to $8,000 for single and joint taxpayers

Married filing separate may claim $4,000

Purchased after December 31 st 2009 and before December 1 st 2009

Not paid back – No recapture if home is lived in as main home for at least 3 years

Purchase loans using Mortgage Revenue Bonds are eligible for Homebuyer Credit - CalHFA

IRS Guidelines - Qualifying for the Tax Credit Occupancy and Property Type Must purchase a “main home” – Primary residence 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 New construction – Purchase date treated as first date you occupy home Must be a First Time Homebuyer Can not have owned another primary home within 3 years of the closing date of new home May own other homes or properties as long as you have never lived in it as your main home

Occupancy and Property Type

Must purchase a “main home” – Primary residence

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

New construction – Purchase date treated as first date you occupy home

Must be a First Time Homebuyer

Can not have owned another primary home within 3 years of the closing date of new home

May own other homes or properties as long as you have never lived in it as your main home

IRS Guidelines - Qualifying for the Tax Credit Maximum income limits – Phase out maximums Married filing joint - $150,000 – Eligible for full credit Phase out begins when MAGI exceeds limit – reduce credit Phase out at $195,000 Single filing status - $75,000 – Eligible for full credit Phase out begins when MAGI exceeds limit – reduce credit Phase out at $95,000 Occupying home as Joint Tenants If you purchase home under joint tenancy and down payment and ownership are not equal Tax credit will be claimed in proportion to ownership in residence

Maximum income limits – Phase out maximums

Married filing joint - $150,000 – Eligible for full credit

Phase out begins when MAGI exceeds limit – reduce credit

Phase out at $195,000

Single filing status - $75,000 – Eligible for full credit

Phase out begins when MAGI exceeds limit – reduce credit

Phase out at $95,000

Occupying home as Joint Tenants

If you purchase home under joint tenancy and down payment and ownership are not equal

Tax credit will be claimed in proportion to ownership in residence

IRS Guidelines - Qualifying for the Tax Credit You Cannot Claim Tax Credit if any of these apply Your modified adjusted gross income (MAGI) exceeds phase out income maximum limits You are a nonresident alien Your home is located outside the United States You sell the home, or it ceases to be your main home before the end of 2009 Recapture applicable if you sell within 3 years of purchase You acquired your home through gift or inheritance You acquired your home from a related person: Spouse, ancestors (parents, grandparents,etc.) Lineal descendants (children, grandchildren, etc.) A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock of the corporation. A partnership in which you directly or indirectly own more than 50% of the capital interest or profits interest

You Cannot Claim Tax Credit if any of these apply

Your modified adjusted gross income (MAGI) exceeds phase out income maximum limits

You are a nonresident alien

Your home is located outside the United States

You sell the home, or it ceases to be your main home before the end of 2009

Recapture applicable if you sell within 3 years of purchase

You acquired your home through gift or inheritance

You acquired your home from a related person:

Spouse, ancestors (parents, grandparents,etc.)

Lineal descendants (children, grandchildren, etc.)

A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock of the corporation.

A partnership in which you directly or indirectly own more than 50% of the capital interest or profits interest

IRS Guidelines - Qualifying for the Tax Credit Claiming the First Time Homebuyer Credit IRS Form 5405 – Attached to 1040 A main home purchased in 2008 is only eligible for $7,500 tax credit and may be claimed on 2008 return 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 CANNOT claim the credit prior to purchase of home 5404 required address of home qualifying for the credit 5404 requires date home acquired Lying on tax return is a federal offense – not worth it You may adjust your W4 withholdings in anticipation of claiming credit on 2009 tax return

Claiming the First Time Homebuyer Credit

IRS Form 5405 – Attached to 1040

A main home purchased in 2008 is only eligible for $7,500 tax credit and may be claimed on 2008 return

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

CANNOT claim the credit prior to purchase of home

5404 required address of home qualifying for the credit

5404 requires date home acquired

Lying on tax return is a federal offense – not worth it

You may adjust your W4 withholdings in anticipation of claiming credit on 2009 tax return