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First time homebuyer credit ends April 30, 2010

There is a big push right now from most new home builders to sell as many homes as possible. The reason for this is directly connected to the First Time Homebuyer Tax Credit which is due to expire on April 30, 2010. Unless the buyer is under contract by the end of April and will close no later than June 30, 2010, they will not qualify for the tax credit.

Here is some additional information about the tax credit directly from the IRS web site. For instance, did you know that a first time homebuyer is someone who has not owned a home for the last 3-years? So even if you owned a home 5 -years ago, sold it and then rented or lived with a relative since then, you would qualify for the tax credit.

Q. Who is considered to be a first-time homebuyer?

A. Taxpayers who have not owned another principal residence at any time during the three years prior to the date of purchase are considered first-time homebuyers. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2005, through July 1, 2008.

Q. Which home purchases qualify for the first-time homebuyer credit?

A. Any home purchased as your principal residence and located in the United States qualifies. You must buy the home after April 8, 2008, and before May 1, 2010 (with closing to take place before July 1), to qualify for the credit. For a home that you construct, the purchase date is considered to be the first date you occupy the home.

For homes purchased after April 28, 2008, and before November 7, 2009, taxpayers (including spouse, if married) who owned a principal residence at any time during the three years prior to the date of purchase are not eligible for the credit. This means that you can qualify for the credit if you (and your spouse, if married) have not owned a home in the three years prior to a purchase. For homes purchased after November 6, 2009, long-time residents can also get the credit under a special rule for a qualifying replacement home. To qualify, you must have owned and used the same home as your principal residence for at least five consecutive years of the eight-year period ending on the date you buy your new principal residence.

If you made an eligible purchase in 2008, you claim the first-time homebuyer credit on your 2008 tax return. For an eligible purchase in 2009, you can choose to claim the credit on either your 2008 or 2009 income tax return. For an eligible purchase in 2010, you can choose to claim the credit on either your 2009 or 2010 return. (1/27/09)

Q. If a taxpayer purchases a mobile home (manufactured home) with land and qualifies for the credit, is the amount of the credit based on the combined cost of the home and land?

A. Yes. The first-time homebuyer credit is ten percent of the purchase price of a principal residence. The total purchase price (mobile home and land) is used to determine the amount of the first-time homebuyer credit.

Q. Is a taxpayer who purchases a mobile home and places the home on leased land eligible for the first-time homebuyer credit?

A. Yes. A mobile home may qualify as a principal residence and it is not necessary that the taxpayer own the land to qualify for the first-time homebuyer credit.

There are many more facts about the first time homebuyer tax credit that most real estate brokers aren't aware of much less their clients. Take the time to visit the IRS site to see if you qualify for this credit. http://www.irs.gov/newsroom/article/0,,id=206291,00.html


 

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