Monday, April 26, 2010 - Article by: FHASUBMISSIONS.COM - ESSEX MORTGAGE BANK -
Just a reminder to you all - Congress modified the $8,000 First-Time Home Buyer Tax Credit program from a "first-time" buyer program into an "everyone" Home Buyer Tax Credit program.
There's 5 days left to claim your tax credit. You have until this Friday.
Check Your Tax Credit Eligibility
Under the program's revised terms, first-time buyers are eligible for up to $8,000 in federal tax credits and long-time homeowners get up to $6,500.
A "long-time" homeowner, according to the IRS, is someone who has used a home as a primary residence for at least 5 consecutive years dating back to 2002.
Collect Your Tax Credit -- Even If You've Already Filed For 2010
If you plan to claim the Home Buyer Tax Credit, here's what you need to know.
First, know that the tax credit is federal. Therefore, it doesn't matter whether you live in Cincinnati, Chicago, or anywhere else -- if you file U.S. taxes, you've cleared the first eligibility hurdle. All you have to do is file -- talk to your accountant about it.
Or, if you've already filed your 2010 taxes (like most people have), you can file an amended return with the IRS that includes your tax credit. You'll get your credit as soon as the IRS and U.S. Treasury can process your return.
Be Aware Of The Tax Credit Deadlines
Second, know your deadlines.
In order to claim the Home Buyer Tax Credit, you must be in mutual contract for your new home no later than April 30, 2010. This means you need more than offer letter -- you need a offer letter signed by both parties. Furthermore, you must be closed on your new home between the dates of November 7, 2009 and June 30, 2010.
So long as you meet these dates, you've cleared the second eligibility hurdle.
Not Every Purchase Is Eligible For The Tax Credit
Third, know the home buys that are specifically excluded by the IRS.
1.The home may not be acquired from a mother, father, spouse, or child
2.The home may not be acquired from an entity in which you're a majority owner
3.The home may not be acquired by gift or inheritance
4.The home's primary buyer must be at least 18 years of age
5.The home's purchase price may not exceed $800,000
6.The home must be meant for use as a primary residence
These 6 rules disqualify just a small percentage of purchases. It's at this point, therefore, that you should double-check just how much of the credit you're eligible to claim.
Not Everyone Will Get The Full Tax Credit
The maximum tax credit as authorized by Congress is for up to $8,000 for first-time home buyers and up to $6,500 for long-time homeowners. Not everyone gets access to the full amount.
For one, the tax credit is limited to 10% of the home's purchase price. Homes selling for less than $80,000 to first-time buyers and $65,000 to eligible repeat buyers will carry a reduced tax credit.
And secondly, the tax credit is tied to a buyer's income levels.
If you are a single-filer with the IRS and your income is less than $125,000, you will receive the maximum credit. The same gors for joint-filers with income below $225,500. In households where income exceeds those limits, however, the home buyer(s) is subject to a haircut.
The credit reduction is 5% for each additional $1,000 in claimed income.
oSingle-filer earning $125,000 : 100% of the tax credit
oSingle-filer earning $126,000 : 95% of the tax credit
oSingle-filer earning $127,000 : 90% of the tax credit
oSingle-filer earning $145,000 : 0% of the tax credit (i.e. no credit)
The math is the same for joint-filers:
oJoint-filers earning $225,500 : 100% of the tax credit
oJoint-filers earning $226,500 : 95% of the tax credit
oJoint-filers earning $227,500 : 90% of the tax credit
oJoint-filers earning $245,500 : 0% of the tax credit (i.e. no credit)
Still Got Questions. The IRS Has Your Answers.
At this point, you know your own eligibility, and the size of your credit. However, you may still have questions. Thankfully, the IRS thought of that with their Bizarre Scenario FAQ. It's worth a look. The FAQ includes scenarios for couples getting married, divorced and separated, plus "flipping" and various "renting homeowner" scenarios.
Or, if you'd rather talk to a person, call your accountant. Tax law is complicated and very specific to an individual. Your accountant should be the only one giving you advice on how to use the tax credit and your own eligibility. If you call me about it, I'll refer you to TurboTax.
How To Claim Your Home Buyer Tax Credit
Here's how to claim the your Home Buyer Tax Credit. There's just 2 very basic steps:
1.Review the eligibility requirements above -- just in case!
2.File your 2011 taxes online
Or, if you want to receive your tax credit faster, consider filing an amended 2010 return. This is especially helpful for self-employed home buyers and other folks that typically file between April 15 and the October 15 deadline.
That's it! Just be sure that you'll use your new home as your "main home" for at least 3 years. Otherwise, the IRS will reclaim your refund.
I need to advise you that I am just the branch manager of Essex Mortgage Bank I am not a Tax advisor or a accountant just basically relaying this information.If you have further question in regards to the tax savings I would suggest you speak to you accountant.
Jeffrey Martino Young Essex Mortgage Bank in Santa Rosa,Ca.95404 toll free 1-877-870-2676. and find us online at www.fhasubmissions.com
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