Tuesday, February 2, 2010

The First Time Homebuyers Credit

The Worker, Homeownership and Business Assistance Act of 2009, signed into law on Nov. 6, 2009, extends and expands the first-time homebuyer credit allowed by previous Acts.

The above is also known as "The First Time Homebuyer's Credit". Citizens were able to first take advantage of this credit in 2008. Taxpayers who purchased a home before April 8, 2008 were able to take the credit. All they had to do was answer some questons at the time they had their taxes prepared; and based on income, and the price of the home, they could possibly receive a credit of up to $7500.

Technically this was not a true refundable credit, but in actuality a no interest loan. The recapture (payback) for folks who received the credit will start with the processing of their 2010 tax return. If they sold the home (or was foreclosed upon), it was due and payable at that time, and definitely with this tax season.

The initial credit did not require the taxpayer to supply any documentation; hence, the fraud turned out to be tremendous!

Under the new law, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2010 and close on the home by June 30, 2010. For qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 return.

The "First Time Homebuyers Credit " has been extended, but with a few restrictions.

  • Anyone applying must supply their Hud-I, Settlement Statement. showing all parties' names and signatures, property address, sales price and date of purchase.
  • For purchasers of mobile homes who are unable to get a settlement statement, a copy of the executed retail sales contract showing all parties' names and signatures, property address, purchase price and date of purchase.
  • For a newly constructed home where a settlement statement is not available, a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.

Meaning, you must send the document(s) in with the tax return. You must file a paper return. If approved, the credit could take from 5 - 8 weeks (or longer) for you to receive the refund. It has been suggested that the documents along with your tax return be sent via certified mail.

The credit is now valued at up to $8000, and as long as you do not sell your home within the first 36 months of ownership, you may not have to pay it back.

Long Term Resident Credit

How wonderful is this? Do you know that if you have lived in your home...your primary residence for any 5 consecutive years of the last eight years you may be able to claim up to $6500 of the credit.

For long-time residents claiming the credit, the IRS recommends attaching, in addition to the documents described above, any of the following documentation of the five-consecutive-year period:

  • Form 1098, Mortgage Interest Statement, or substitute mortgage interest statements
  • Property tax records or
  • Homeowner’s insurance records

Here's where good recordkeeping comes into play. You must have 5 years of these documents !

You know my closing. Affordable, Virtual tax preparation. Always free e-file and direct deposit.

Call me or e-mail me your tax questions, and I will answer them on the blog.

I look forward to being your tax professional !

Blessings and Wisdom and Prosperity

Wanda E Green (Uigei)




1 comment:

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