- According to TurboTax, the first-time home buyer credit is only available to taxpayers who purchased a first home where the sale was closed by Sept. 30, 2010, and a binding contract was entered by April 30, 2010. For qualifying homebuyers, the tax credit amounts to 10 percent of the purchase price of the home up to a maximum of $8,000. In other words, any home that cost $80,000 or more is eligible for the full $8,000 credit.
- The home tax credits passed by Congress were aimed at revitalizing the U.S. housing market and initially only applied to first-time homebuyers. TurboTax states that an additional credit was created for buyers who already had purchased homes between Nov. 6, 2009, and April 30, 2010. The maximum tax credit amount for repeat buyers is $6,500 and according to the National Association of Home Builders, the credit does not apply to homes purchased with value that exceeds $800,000.
- While you may be eligible for substantial tax savings if you made a home purchase that qualifies for the home tax credit by the due date, the credit is phased out for those with high income. The National Association of Home Builders says the tax credit is reduced for single taxpayers with income that exceeds $125,000 and married taxpayers with income that exceeds $225,000; the credit is reduced to zero if income exceeds $145,000 for single taxpayers or $245,000 for married taxpayers.
- Taxpayers must claim the home tax credit on their federal income tax returns. The IRS states that you must fill out Form 5405 (see Resources) and include it with your tax return, as well as "a copy of Form HUD-1, Settlement Statement, or other settlement statement, showing all parties' names, property address, sales price and date of purchase."
- Advertisement -
- Advertisement -