July 31, 2010 by Josh Bell
The Worker, Homeownership, and Business Assistance Act of 2009 provides that new or first-time home buyers can qualify for tax cuts. They can avail of ten percent of the property’s purchase price up to $8,000 as tax credit.
To qualify as a new home buyer, you cannot have owned your main place of residence for three years before this purchase. If you are married, this includes both partners.
As well, anyone under the age of 18 or someone who is a dependent of another taxpayer is not qualified. Another condition is that it is only available on houses that are worth less than $800,000, and needs to be repaid if the house is sold or stops being used as the principal residence in less than three years.
If the home was purchased on or after 01 January 2009 and on or before 06 November 2009, the income limits of $75,000 for single taxpayers and $150,000 for married ones who are filing jointly will apply. If the home was purchased after 06 November 2009 and on or before 30 April 2010, the income limits are $125,000 for single taxpayers and $225,000 for married couples.
Official forms have to be completed and some documentations are required for buyers to claim the tax credit. They need to complete IRS Form 5405, which has to be attached with the HUD-1 settlement form.
Sometimes the HUD-1 is not relevant, in which case you need to use a copy of the certificate of occupancy. It you bought your place in 2010, you also have the ability to claim it in either 2009 or 2010.
In order to qualify for the tax credit, the purchase should have occurred on or after 01 January 2009 and on or before 30 April 2010. If the binding sales contract was signed by 30 April 2010, the transaction must be completed or must be settled on or before 30 June 2010.
Recently, there have been proposals for an extension of the deadline to close the transaction be moved to 30 September 2010. According to various realtor groups, the tax credit has created a rush to buy homes, which in turn created a big backlog in completing sales.
This author has been blogging about taxes for the past four years. Additionally, the writer takes pleasure in writing regarding New York real estate, such as apartments in Midtown and Sutton Place apartments.
