$8000 First Time Homebuyers Tax Credit FAQ
Whats All The Fuss About?
The government is handing out free money!!! Thats what all the fuss is about! The American Recovery and Reinvestment Act of 2009 allows first time homebuyer’s to take a tax credit of up to $8,000 if they purchase a home before December 1, 2009!
Frequently Asked Questions
Am I eligible to claim the $8,000 tax credit?
If you qualify as a first time homebuyer and you buy a home before December 1, 2009, you qualify for the tax credit. The date of purchase is recorded as the date at which closing taes place and the title of the property is transferred to your name.
Can you define what a first-time home buyer is?
The term “first time homebuyer” refers to an individual that hasn’t purchased a home during in the previous three years. If you are married, the law accouts for your spouses home purchase history as well as your own
What homes are eligible to qualify for the $8,000 tax credit?
The home must be used as a “principal residence” in order to be eligible for the tax credit. This means it must be your primary residence and could come in the form of a townhouse, condo, single family home, houseboat, or manufactured (mobile) home.
Does my level of income effect the amount of the tax credit?
The most that an individual filing as “single” can make is $75,000. Married persons that choose to file a joint return can earn up to $150,000. There is a phaseout range of $20,000 for the tax credit which means that the amount of the tax credit will be $0 if your modified adjusted gross income exceeds $95,000 as a single filer or $170,000 as a married couple filing jointly.
How do they determine how much the tax credit is for?
The IRS calculates the credit as 10% of the price of the home with a cap of $8,000. This means of the purchase price of your home is $80,000 or more, you will qualify for the full $8,000 tax credit.
Whats the difference between a tax credit and a tax deduction?
A tax credit is considered a reduction in what the taxpayer owes. This means that an individual that owes $10,000 in taxes and receives an $8,000 credit would owe $2,000 at tax time. Tax deductions are “deducted” from the amount of income that is taxed. If you made $10,000 this year and received a $8,000 deduction, you would only be taxed on $2,000 of your income for that year.
What do I do to claim the tax credit? Do i have to fill out an application or any forms?
You do have to fill out forms, the good news is you’d allready be filling them out come tax time anyway! The amount of your credit can be figured out by filling out IRS Form 5405. Once you figure out how much of the tax credit you’re eligible for, you claim the credit on line 69 of IRS Form 1040 (this is the form you normally fill out for taxes each year).
Do I have to get pre-approved in order to qualify for the tax credit?
Nope! As long as you qualify under the previously mentioned income limits then you can claim the tax credit on your taxes.
What if I’m not a US citzen? Can I still claim the tax credit?
If your status is defined as a “nonresident alien”, and you meet both the previously mentioned “first time homebuyer” and “income limit” qualifications, you too are eligible to claim the tax credit.
What if I bought a house in 2008? Can I still claim the tax credit?
Unfortunately in this case you would not be eligible for the first time homebuyer tax credit. However, if you purchased your first home between April 9, 2008 and January 1, 2009, it is possible that you may qualify for a different tax credit. Consult your tax professional if this case applies to you and they can better guide you in the process.
If my home purchase is financed uner a Mortgage Revenue Bond (MRB) program, do I still qualify for the tax credit?
Yes! The credit is allowed to be combined with the MRB home purchase program. However, if you purchased your home through the MRB program in 2008 you do not qualify for the credit.
May 6th, 2009 at 12:17 pm
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