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FIRST TIME HOME BUYER TAX CREDIT Q AND A

Weichert Realtors Porter Properties
September 28, 2009

Auburn Home Buyers/ Opelika Homes for Sale just became more affordable. Get Excited!

Home buyers in Auburn and Opelika benefit from: Congress passed the First-Time Home Buyers Tax Credit in January 2009 to help stimulate the U.S housing market & address the economic challenges facing our nation.

Time is running out to capitalize on this great opportunity for Auburn home buyers & Opelika homes for sale buyers. By granting a tax credit of up to $8,000. This is an opportunity for Opelika Auburn Home first time buyers. The November 30th deadline is fast approaching and now is the time to buy. Below are some of the criteria, qualifications & information on the tax credit:

1. Auburn Home Buyer: What is the credit?

A. 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.

2. Auburn Home Buyer: 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 ($80,000 if purchased after Dec. 31, 2008, and before Dec. 1, 2009).

3. Auburn Home Buyer: Which home purchases qualify for the first-time home buyer 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. For an eligible purchase in 2009, you can choose to claim the credit on either your 2008 or 2009 income tax return.

4. Auburn Home Buyer: 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.

5. Auburn Home Buyer: Who is considered to be a first-time home buyer?

A. Taxpayers who have not owned another principal residence at any time during the three years prior to the date of purchase.

6. Auburn Home Buyer: 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.

 

7. Auburn Home Buyer: Can a taxpayer claim the first-time home buyer credit after entering into a contract for the purchase of a residence but before closing on the purchase?

A. No. Taxpayers cannot claim the credit before there is a completed sale and purchase of the residence. The sale and purchase are generally completed at the time of closing on the purchase. (New 7/2/09)

8. Auburn Home Buyer: Would I be considered a first time home buyer if I owned a principal residence outside of the United States within the previous three years?

A. Yes. A taxpayer who owned a principal residence outside of the United States within the last three years is not disqualified from taking the credit for a purchase within the United States.

9. Auburn Home Buyer: Who cannot take the credit?

A. If any of the following describe you, you cannot take the credit, even if you buy a new home:

  • Your income exceeds the phase-out range. This means joint filers with MAGI of $170,000 and above and other taxpayers with MAGI of $95,000 and above.
  • You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.
  • You do not use the home as your principal residence.
  • You sell your home before the end of the year.
  • You are a nonresident alien.
  • You are, or were, eligible to claim the District of Columbia first-time home buyer credit for any taxable year. (This does not apply for a home purchased in 2009.)
  • Your home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)
  • You owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2005, through July 1, 2008.

10. Auburn Home Buyer: If I claim the first-time home buyer credit in 2009 and stop using the property as my main home before the 36 month period expires after I purchase, how is the credit repaid and how long would I have to repay it?

A. If, within 36 months of the date of purchase, the property is no longer used as the taxpayer’s principal residence, the taxpayer is required to repay the credit. Repayment of the full amount of the credit is due at that time the income tax return for the year the home ceased to be the taxpayer’s principal residence is due. The full amount of the credit is reflected as additional tax on that year’s tax return. Form 5405 and its instructions will be revised for tax year 2009 to include information about repayment of the credit. (05/06/09)

**Source: http://www.irs.gov/newsroom/article/0,,id=206291,00.html