The April 30 deadline is fast approaching to get a deal signed and confirmed, in order to qualify for the credits being offer by Uncle Sam on home purchases. Here are some of the more commonly asked questions and their answers, courtesy of the National Association of Homebuilders!
1. How does a home buyer claim the tax credit?
Answer: The credit is claimed when the home buyer files or amends their federal income taxes. For qualifying homes, purchased in 2009 or 2010, the taxpayer must complete form 5405 and attach a copy of the settlement statement. In most cases, the settlement statement is a properly executed Form HUD-1.
In circumstances where a HUD-1 is not provided, such as purchasing a mobile home or a newly constructed home, the IRS will accept an executed retail sales contract(mobile homes) or a copy of the certificate of occupancy (new homes).
2. Does the homebuyer have to sell their current home in order to qualify for the $6,500 repeat buyer tax credit?
Answer: A home buyer does not need to sell their current home in order to be eligable for the repeat buyer credit. They can continue to own both homes, and rent or use their former home for something else, as long as it no longer serves as their principal residence. The taxpayer is required to use the new home as their principal residence, and live in it for at least 36 months, or they will have to repay their credit.
3. Do married couples both have to meet the eligability requirements in order to claim the credit, even if they file taxes separately?
Answer: Both spouses must fully meet all of the eligability requirements for either the $8,000 first time home buyer tax credit or the $6,500 repeat buyer tax credit, regardless of if they file joint or separate tax returns. However, if an unmarried couple purchases a home and only one person qualifies, the eligable person may claim the full credit.
4. Do all home purchases need to be completed by April 30, 2010, in order to be eligable for the credit?
Answer: There are 2 exceptions to the April 30 deadline. If the buyer enters into a binding contact by the deadline, they have until June 30, 2010, to complete the purchase. The deadline has been extended a year, to April 30, 2011, for members of the uniformed services, Foreign Service or employees of the intelligence community who have been on qualified extended duty outside the United States for at least 90 days, between January 1, 2009, and April 30, 2010.
I hope these questions and answers help and I hope you have the opportunity to take advantage of Uncle Sam's gift to homebuyers!
Thursday, April 8, 2010
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