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Federal Tax Incentives for Buyers
This is the third version of the US Federal Tax Incentive for buyers. In the latest law, Public Law 111-92, which passed November 6, 2009, first time home buyers can receive tax credits for up to $8,000 or 10% of the purchase price of their new home.
A first time home buyer is defined as someone who has not had an interest in a principal residence for three years prior to purchase.
The contract for purchase and sale must be signed by April 30, 2010 and close no later than July 1, 2010.
New this year is a tax credit for up to $6,500 for buyers of a home who have lived in their last home as a principal residence consecutively for 5 of the previous 8 years.
These credits are capped for those making more than $125,000 or $225,000 if married. There is also a cap on the purchase price of the new home of $800,000. The buyer must be a US citizen and 18 years old.
The credit is claimed using Form 5405 for purchases prior to November 7, 2009, which you file with your original or amended tax return. A copy of the executed settlement statement or HUD-1 is now required to accompany the amended or original tax return.
There is no repayment of the tax credit if the home is owned for at least 36 months.
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