This may be redundant for many folks but my experience to date suggests that many people still don’t know about the government incentive to assist First Time Home Buyers. So, if you already have a clear understanding of how this tax credit works and who is legible to take advantage of it… skip this post and read my next one!
How much can I claim for the tax credit?
Probably the first question on everyone’s mind… Borrower’s can claim up to $8,000 or 10% of the home’s value whichever is less.
Who is eligible for this tax credit?
First time home buyers or those who have not owned a principal residence in 3 years prior to the purchase. This applies to BOTH purchaser and purchaser’s spouse!
Does this tax credit need to be repaid?
Provided the home is your primary residence and you live in it for a minimum period of three years the tax credit does not have to be repaid. If the home is sold within three years of the original purchase, the entire amount of credit is recaptured upon sale.
How long is the tax credit valid?
The tax credit became effective January 1, 2009 and will remain in effect until December 1, 2009.
What type of a property is eligible for the tax credit?
Any single family residence (including condos, co-ops, and townhomes) that will be used as the principal residence. Also included are manufactured homes (also known as mobile homes) and houseboats.
Is there an income limit?
Yes, the full amount of the credit is available for individuals with an adjusted gross income of no more than $75,000 ($150,000 for a joint return).
How do I claim the tax credit?
You apply for the tax credit at the time of your Federal Income Tax Return Filing by completing IRS Form # 5405. Specifically, home buyers should complete Form #5405 to determine their tax credit amount, and then claim this on Line 69 of their 1040 income tax return. Note: You cannot claim the credit for an intended purchase for some future date; it must be a completed purchase.
Just a reminder I am neither a tax consultant nor an attorney as always please consult these professionals for additional details. Another terrific online resource for answers to other questions regarding the tax credit is http://www.federalhousingtaxcredit.com/2009/faq.php.
If you are considering the purchase of a home please remember to start your Charleston Real Estate property search at HeatherLord.com and when you are ready to discuss next steps just email or call us - We are here to assist folks find that perfect home in Charleston and the Greater Charleston, SC area.