Tax Credits for Homebuyers
First-time homebuyers. An individual (and if married, individual's spouse) that did not own a principal residence during the three years prior to purchasing the new home.
Long-time residents. An individual (and if married, individual's spouse) who has owned and used a residence as his or her principal residence for any five consecutive years during the eight years prior to purchasing the new home. A long-time resident is not required to sell his or her former principal residence to be eligible for the credit.
Amount of Credit
10% of the purchase price of the home up to a maximum of $8,000 for first-time homebuyers and $6,500 for long-time residents. For purchases occurring prior to January 1, 2009, maximum amount of credit is $7,500.
Claiming the Credit
For purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 income tax returns. Required attachments include Form 5405, First-Time Homebuyer Credit, and an executed settlement statement.
Repaying the Credit
For homes purchased during 2009 or 2010, the homebuyer credit must be repaid if the home is sold or is no longer used as a principal residence within 36 months from the date of purchase.