Home buyer tax credit questions and answers Part 2

The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8000 for qualified first-time home buyers Purchasing a principal residence on or after January 1, 2009 and before December 1, 2009.

Are their any income limits for claiming the tax credit?

The tax credit amount is reduced for buyers with a modified gross income of than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The tax credit is reduced to $0 for single taxpayers with a modified gross income of more than $95,000 and married taxpayers with a modified gross income of more tan $170,000.

How is this home buyer tax credit different from the tax credit Congress enacted in July of 2008?

The 2009 tax credit does not have to be repaid. Because the 2008 tax credit had to be repaid, the previous "credit" was really an interest-free loan. This tax credit is a true credit. However home buyers must use the residence as a principal residence for at least 3 years or face recapture of the credit.

How do I claim the Tax Credit?

Claiming your tax credit easy. You use IRS form 5405 to determine the tax credit amount and then claim this amount on Line 69 of your 1040 income tax return. No other applications or forms are required. You will want to be sure that you qualify for the credit under the income limits and the first time home buyer tests.

What type of properties qualify for the tax credit?

Any home that will be used as a principal residence qualifies for the credit.

I purchased my home in early 2009 and have already filed to receive the $7500 credit on my 2008 returns, How can I claim the new $8,000 credit instead?

Home buyers in this situation may file and amended 2008 tax return with a 1040X form. You should consult with your accountant to ensure you file this correctly.

My next post will wrap up the tax credit question and answer section. If you need immediate advice or have any questions on this credit please contact me anytime at 315-515-8348.