Charleston SC Home Owner Tax Credit - Impact on Current Home Owners and Military Members

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Dec 17th 2009

Charleston SC Home Owner Tax Credit - Impact on Current Home Owners and Military Members

Posted By: Heather Lord @ 3:54pm In: General

 

New Home Buyer Tax Credit - Impact on Current Home Owners and Members of the Military

Although there was a plethora of speculation regarding the Tax Credit extension most everyone was simply waiting for the timing of the announcement ! Hard to argue with the impact of the Tax Credit ( at least on the surface) and for the local perspective lets take a look at the numbers for the Charleston SC area.

Charleston SC & AREA * Solds - % Change 2008 vs 2009

 

Unit Volume

Aug.

Sept.

Oct.

Nov.

 

 

 

 

-8.18

+3.4

+22.46

+57.59

 

Dollar Volume

Aug.

Sept.

Oct.

Nov.

 

 

 

 

-19.8

-6.98

+9.35

+37.33

 

 

 

 

 * All figures extracted from Charleston Trident Association of Realtors MLS data .

Moving forward opinions remain mixed on whether the Oct/Nov sales uptick will continue at the same momentum. Rock bottom interest rates continue for home mortgages with the 30 year fixed averaging 4.81 at the time of this blog. Certainly with the expansion of the tax credit to current homeowners there is reason to be optimistic.

So, for most of us the tax credit extension was "In the Bag" so to speak however the expansion of terms was not as certain   - at least from this Realtor's perspective. So what do these expanded terms mean and who will benefit? Let's take a look ...

Qualified Repeat Home Buyers

New !! Current home owners who buy a replacement principal residence may also claim a credit of up to $6,500 ( up to $3,250 for a married individual filing separately). Repeat home buyers do not have to purchase a home that is more expensive than their previous home to qualify for the tax credit.

 Restrictions:

  • 1) Home Owners must have used the home being sold or vacated as a principal residence for five consecutive years within the last eight years.
  • 2) Individuals cannot have a Modified Adjusted Gross Income ( MAGI) of greater than $125,000 to receive full credit
  • 3) Couples filing jointly cannot have a Modified Adjusted Gross Income ( MAGI) of greater then $225,000 to receive full credit
  • 4) The home purchased may not exceed $800,000
  • 5) Dependents are not eligible to claim the credit
  • 6) A buyer must be 18 years of age on the date of the purchase.
  • 7) Buyer must attach a copy of their HUD-1 Settlement Form to their Tax Return as proof of the completed home purchase.

 

Military, Intelligence and Foreign Service Members

New !! The revised program also recognizes the home ownership challenges faced by the men and women who serve our country outside of the USA; they now have an additional year to buy a principal residence in the US and qualify for the credit.

New!! Members of the Military, Intelligence and Foreign Service do not have to repay the credit if they have to sell their home after fewer than 3 years occupancy due to official business.

 Restrictions:

  • 1) Members must have been on Extended Duty Service Outside of the USA during the period after December 31, 2008 up to May 01, 2010.
  • 2) Eligible tax payers must buy or enter into a binding contract to purchase on or before April 30, 2011. The tax payer must close on the home no later than June 30, 2011.

Claiming the Credit

You claim the tax credit on your Federal Income Tax Form. Home Buyers should complete *Form 5405 and then claim this amount on their 1040 Income Tax Form.

Note: You cannot claim the credit on Form 5405 for an intended purchase for some future date: it must be a completed purchase.

* A new form 5405 is being developed by the IRS and anyone purchasing a home after November 6, 2009 must use this new form. This also applies to tax payers who are claiming the credit on their 2009 Tax Return.

 

 

 

 

 

 

 

 

 

 

 

 



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