Did you purchase a house between January 1 and April 30, 2010? If so, then you may qualify for one of the two tax credits: the first-time home buyer tax credit and the repeat home buyer tax credit.
The first-time home buyer tax credit is worth 10% of the purchase price of the home up to a maximum of $8,000. Eligibility for this means that you would have to have not owned a principal residence in the three years before the new home purchase.
The repeat home buyer tax credit is worth up to 10% of the purchase price, up to a maximum of $6,500. Eligibility for this means that would have to have owned and lived in the same home for at least five consecutive years.
First, to qualify for the home buyer tax credit, the price of the property must be under $800,000. Second, in order to claim it on your 2010 taxes, you must have signed a contract to purchase the home by May 1, 2010 with an original closing date of June 30, and an actual close date by or before September 30, 2010. To be financially eligible for it, your modified adjusted gross income (MAGI) had to be less than $125,000 for single people or $225,000 for joint filers. A reduced credit is available for home buyers with MAGI of up to $145,000, or $245,000 for married homeowners. The following are the documents required: A copy of your settlement statement, or HUD-1 that was provided at closing. For newly constructed homes, a dated copy of the certificate of occupancy that shows your name and the address of the home. For repeat buyers, copies of documents showing that you lived in your previous residence for five consecutive years during the past eight years. Acceptable documents include mortgage interest statements, property tax records or homeowners insurance statements.
Once you file, expect to wait up to 6 weeks to receive your check from the IRS.
2008 Tax Credit Payback Begins The Housing and Economic Recovery Act of 2008 provided up to a $7,500 interest free loan with a two year grace period in the form of a refundable tax credit for qualified first-time homebuyers of a principal residence in 2008. Now that 2010 has passed, it is time to start paying the interest free loan back.
The tax credit in 2008 was actually a 15 year interest free loan with a 2 year grace period. To calculate what you owe, divide whatever amount you received in 2008 by 15, and that is the amount you will have to pay back.
For example, if you qualified for the full $7,500, then you would have to repay $500 per year for the next 15 years.
If you bought your house in 2008 and have re-sold it, then you will owe even more, because you will be required to repay the entire amount of the interest free loan back all at once.
In conclusion, if you purchased a home in 2010, you may be eligible for the home buyer tax credit if the property value was less than $800,000, if you met the definition of a first time or repeat home buyer, and if your MAGI income was within the proper range. When you file your taxes, bring the appropriate documentation with you and you should be able to qualify. If you took advantage of the interest free loan 2008, you will have to start repaying the loan, but if you qualified for the home buyer tax credit in 2009 or 2010, you do not have to pay anything back.
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