Tax Credits for homebuyers

Tax Credits for Homebuyers

Tax Credits for Homebuyers

Tallahassee -

Tax Credits for Homebuyers

Eligibility

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.

Time Period

• First-time homeowners are initially eligible to claim the credit for homes purchased on or after April 9, 2008. 
• Long-time residents are initially eligible to claim the credit for purchases on or after November 7, 2009. 
• Credit is available for purchases of principal residences through April 30, 2010 for both first-time homebuyers and long-time residents.  Purchases closing through June 30 are also eligible if a purchase contract is entered into by April 30.
• Members of the Armed Forces serving overseas may have an additional year to qualify 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.

Limitations

• Only the purchase of a principal residence located in the U.S. qualifies for the credit.  Vacation homes and rental properties are not eligible.
• Purchase price of home cannot exceed $800,000 for purchases after November 6, 2009.
• Credit is limited for high income taxpayers – phase out range is between $125,000 and $145,000 for individual taxpayers and between $225,000 and $245,000 for joint filers.

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.