Dropping Jan temperatures, bring some warmth for the first time home buyers. Full credit is available for married couples filing a joint return whose MAGI (Modified Annual Gross Income) is $150,000 or less and for other taxpayers whose MAGI is $75,000 or less, for purchases on or before Nov 9,2009. For purchases after Nov 9, 2009, married couples 225 K to 245K and for other tax payers 125 K to 145K.
FOR 2008 HOME PURCHASES
A tax credit for the first time home buyers that can be worth up to $7500.00 for homes purchased in 2008, the credit is similar to a no interest loan and must be repaid in 15 equal installments, beginning with the 2010 tax year.
FOR 2009 HOME PURCHASES
The credit was expanded in 2009 for homes purchased in 2009, increasing the amount to $ 8000.00, 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.
FOR 2010 HOME PURCHASES
Deadline for a credit of up to $8000.00 is now extended. Home owners who have a binding contract to purchase a home before May 1, 2010, are eligible for the credit. Buyers must close on the home before July1, 2010.Now extended to Sept 30, 2010.
Credit of $8000.00 need not be paid back unless the home ceases to be the main residence of tax payer, within a period of three year, following the purchase.
Credit applies to the main residence of the tax payer,reduces his/her tax bill or increases his/her refund dollar for dollar.This is fully refundable ,meaning the credit will be paid out to the eligible tax payer,even if they owe no tax or the credit is more than the tax owed.
Credit is claimed using Form 5405 which you file with your original or amended return.
