The Worker, Home ownership, and Business Assistance Act of 2009 has established a tax credit of up to $6,500 for
qualified ed move-up/repeat home buyers (existing home owners) purchasing a principal residence after November 6, 2009
and on or before April 30, 2010 (or purchased by June 30, 2010 with a binding sales contract signed by April 30, 2010).
The following questions and answers are from www.federalhousingtaxcredit.com and provide basic information about
the tax credit. If you have more specif c questions, we strongly encourage you to consult a qualified ed tax advisor or legal
professional about your unique situation.
Who is eligible to claim the $6,500 tax credit?
Qualified move-up or repeat home buyers purchasing any kind of home are
eligible to claim this credit.
What is the definition of a move-up or repeat home buyer?
The law defines a tax credit qualified move-up home buyer (“long-time
resident”) as a home owner who has owned and resided in a home for at
least five consecutive years of the eight years prior to the purchase date.
For married taxpayers, the law tests the home ownership history of both
the home buyer and his/her spouse. Repeat home buyers do not have
to purchase a home that is more expensive than their previous home to
qualify for the tax credit.
How is the amount of the tax credit determined?
The tax credit is equal to 10 percent of the home’s purchase price up to a
maximum of $6,500. Purchases of homes priced above $800,000 are not
eligible for the tax credit.
Are there any income limits for claiming the tax credit?
Yes. The income limit for single taxpayers is $125,000; the limit is $225,000
for married taxpayers filing a joint return. The tax credit amount is reduced
for buyers with a modified adjusted gross income (MAGI) above those
limits. The phaseout range for the tax credit program is equal to $20,000.
That is, the tax credit amount is reduced to zero for taxpayers with MAGI
of more than $145,000 (single) or $245,000 (married) and is reduced
proportionally for taxpayers with MAGIs between these amounts.
How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008? How is this different than the rules established in early 2009?
The previous tax credits applied only to first-time home buyers and were
for different amounts of money.
How do I claim the tax credit? Do I need to complete a form or application?
Are there documentation requirements?
You claim the tax credit on your federal income tax return. Specifically,
home buyers should complete IRS Form 5405 to determine their tax credit
amount, and then claim this amount on line 67 of the 1040 income tax form
for 2009 returns (line 69 of the 1040 income tax form for 2008 returns). No
other applications are required, and no pre-approval is necessary.
HUD is now allowing "monetization" of the tax credit. What does that mean?
It means that HUD allows buyers using FHA-insured mortgages to apply
their anticipated tax credit toward their home purchase immediately rather
than waiting until they file their 2009 or 2010 income taxes to receive a
refund. These funds may be used for certain downpayment and closing
cost expenses. Under HUD’s guidelines, non-profits and FHA-approved lenders are
allowed to give home buyers short-term loans of up to $8,000. The
guidelines also allow government agencies, such as state housing finance
agencies, to facilitate home sales by providing longer term loans secured
by second mortgages.
Frequently Asked Questions About the Move-Up/Repeat Home Buyer Tax Credit
Please see www.FederalHousingTaxCredit.com for more detailed answers and more FAQ.
Source: www.FederalHousingTaxCredit.com
Information accessed: 11/8/09
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