Homebuyer Tax Credit 2010

The homebuyer tax credit that was scheduled to expire in November 2009 has been modified and extended by Congress and signed into law by President Obama.

The first time homebuyer tax credit remains at 10% up to a maximum of $8000 for anyone buying a principal residence who has not owned a home for the previous three years. The new law also adds a credit of 10% up to $6500 for people buying a home who have already owned as long as they have lived in their residence for at least five of the past eight years.

There were some other changes made with the new law as well. There is now a cap of $800,000 that can be paid for a home in order to qualify for the credit. They also have increased the income limits for qualifying for the credit. A single taxpayer can now have an adjusted gross income of $145,000 and married couples who file jointly can make a max of $245,000. Someone who has received the tax credit must not move within three years in order to avoid having to repay it.

There are no requirements in the law stating that those who receive the $6500 tax credit must sell their present home. This means that people can rent out their residence and still receive the tax credit. There is also no requirement that the new purchase be of higher value than one's existing home. This will provide opportunities for retirees who are looking to downsize and still receive their tax credit.

People who are claimed as a dependent for someone else or are under the age of eighteen are not eligible for the credit. Expanded tax credit opportunities may be available to individuals who serve in the military, the foreign service and the intelligence community.

A tax credit is not the same as a deduction. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. For instance, if you owe $1000 for your federal taxes you would receive $7000 after receiving the $8000 tax credit. In order to receive the credit you simply claim it on your federal income tax return. Home buyers should complete IRS form 5405 to determine their amount. You will need to include your HUD-1 statement that you were given at the time of your home purchase in order to verify that you made a purchase. Individuals who purchase a home in 2010 also have the option to file an amended 2009 return and receive it from the previous year's taxes.

Visit www.federalhousingtaxcredit.com for more information about the tax credit or to see frequently asked questions.

If you are interested in taking advantage of the homebuyer tax credit, contact me today at rbohr1@hotmail.com or 602-478-7015. You can also visit my website at www.robbohr.com.