Home Buying and The $8,000 Tax Credit

The date is coming. When April 30^th rolls into town, that $8,000 tax credit to new home buyers is going to be gone for good. They have actually extended the time for it at least once I am aware of. The First-Time Home Buyer Tax Credit was introduced in 2009 as a way to stimulate the housing market. If you sign the sales contract by April 30, 2010, you get another month to finalize the transaction; still qualifying for the credit.

In order to receive the eight grand, you do have to qualify:

(C’mon, this is a government program. There had to be some hoops.)

-So you could not have had a principle residence in your name three years prior to the current purchase.

-Single? Then you cannot make over $125k or you won’t receive the full credit. Married taxpayers can’t make over $225K

-The home being bought can’t have a price over $800k.

-The home can’t be purchased from a family member

Aside from the above stipulations, it just comes down to paperwork. The IRS requires you fill out a Form 5405 so they can determine your exact tax credit amount. This will be processed after the purchase is complete. The HUD-1 form that comes from your closing statement will need to be attached to the 5405. If you’re buying new, then there is no HUD-1. So attach a copy of the certificate of occupancy.

The tax credit will be claimed on either last year’s or this year’s return. You will not be able to file online because of all the extra forms and paperwork you will be including.