10 FAQ of First-Time Home Buyer Credit |
By Lacy Gallagher on October 10, 2011
.jpg.aspx?width=75&height=75) The decision to buy a home is monumental one, and the IRS offers a reward to those who have made that venture over the past couple years. The first-time homebuyer credit is a tax credit offered to eligible individuals and/or couples who purchased a home as your primary residence for the first time in 2008, 2009 or 2010. There are several common questions that surround this bill; the following are 10 thing things you never knew by J.K. Lasser.
1. You don’t have to be a first-timer to get the credit. Long-time residents may qualify for modified credit that cannot exceed $6,500 ($3,250 for a married filing separately return). The taxpayer must have maintained a primary residence for 5 consecutive of 8 years.
2. Purchasing from an in-law does not bar the credit. A taxpayer buying the home from a related person (spouse, ancestor, lineal descendant but not a person related by marriage) cannot claim the credit. Therefore a husband and wife purchasing a home from the husband’s parents allows the wife eligibility for the credit.
3. Mobile home is a principal residence for the credit. The taxpayer (and spouse claiming) the credit cannot have owned a mobile home in the past three years because that is considered a primary residence.
4. The credit can be claimed even though the seller retains legal title. In he case of a lease-to-own agreement, where the seller retains the title until the taxpayer has completed payment, the buy can still be treated as the owner for purposes of the credit.
5. A nonresident alien cannot claim the credit. The credit can only be claimed by citizens and resident aliens.
6. Young buyers may be barred from the credit. The buyer must be 18 years of age and cannot be claimed as a dependent on another taxpayer’s return.
7. Expensive homes don’t qualify for the credit. After November 6, 2009, any home over $800,000 cannot qualify for the credit, but prior to that date there was no dollar limit on the purchase.
8. There are different income limits, depending on the purchase date. The closing date of the home is the determining factor of the income limits that apply to the credit.
- Pre November 07, 2009: fully credit if modified adjusted gross income (MAGI) is less that $75K for singles and $150 for joint filers
- After November 6, 2009: full credit only if MAGI is less that $125,00 for singles and $225,00 for married filing jointly
9. Having a nonqualified cosigner does not spoil the credit. No matter if the cosigner is unqualified (aka already owns a home) as long as the buyer is qualified, the credit can be claimed.
10. There is no credit recapture for those on official extended duty.
- Prior to 2009: 15-year recapture period
- After 2008: recapture if the home ceases to be principal residence within 3 years of purchase
Resources:
http://www.irs.gov/newsroom/article/0,,id=206291,00.html
http://www.irs.gov/newsroom/article/0,,id=204671,00.html |
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