First Time Home Buyer Tax Credit – Free Online Guide
All you wanted to know about First Time Home Buyer Tax Credit
Housing market saw some drastic changes in the after effects of the bursting of the sub-prime mortgage bubble. With the collapse in housing prices, people ended up losing all of the equity in their homes. After the adjustable rate mortgages were reset to their higher rates, borrowers could no longer find the money to make the payments. Result was whopping rise in foreclosures rates and the banks and lending institutions were left with the keys of the home. The lending institutions suffered heavy losses attempting to sell these homes. Consequently, banks tightened up their lending standards to a great extent. This was just the start of the credit crisis that eventually hamstrung the nation’s economy and drove it into recession.
The situation forced the government to step up and took some decisive steps to help arouse the failing economy by furthering demand and opening up the credit markets. Government took a lot of measures but they were too complicated to make sense to most of the people. However, one of the programs became wildly popular and that program was the First-Time Home Buyer Tax Credit. The law that was originally passed in year 2008 had a provision for a 7,500 dollars tax credit to people purchasing their first home. The credit became fast popular with home buyers and, aided with low interest rates, did temporarily prop up the sagging housing market. Indeed, the First time home buyer tax credit became so popular that President Obama went on to extend the tax credit in 2009 and the amount was also increased to 8000 dollars. To qualify for such credit, one needed to be a first time home buyer (should not have purchased any property in last 3 years). The purchase date of home should be in between the dates January 1, 2009 and December 1, 2009. Single persons having an income of 75,000 or more are not eligible to get the tax credit and married couples should be earning less than 150,000 to qualify. First Time Home Buyer Tax Credit 2011 A lot of people confuse First Time Home Buyer Tax Credit to be some kind of tax deduction. However, the two are substantially different. In a tax credit, the taxpayer gets full reduction on what he owes, and in tax deduction an amount is subtracted from your earnings, which is taxed. Obama offered a great incentive to qualified First Time Home Buyers through his Economic Stimulus Package; through this program one could get a refundable tax credit of 8000 dollars. All the qualified home purchases that were made on or before 30th of April in year 2010 can be eligible for housing stimulus of 8000 dollars. The original law passed in year 2008 provided for a 7,500 dollars tax credit to anyone purchasing their first home. The aim to pass the law was to arouse an otherwise sagging house market. The program became so popular that President Obama went forward to extend it in year 2009. Read on to understand the details you would need to meet so as to qualify for the refundable tax credit of $8000 on your first home purchase. Criteria to Qualify 1. You would need to be a first time home buyer; well, that doesn’t mean that you should never have bought a home in your life, but you or your partner should not have owned any principal residence in last three years. 2. The purchase date of the house should be after November 2009. 3. To be eligible for the tax credit, single taxpayers should be earning less than $75,000 a year and married tax payers should have earnings less than $150,000. Some people would qualify for 8000 dollars home buyer tax credit even after the given deadline of April 2010. According to the Federal Housing Tax Credit website, qualified service members ordered on a period of official extended duty might be eligible for the additional one year extension. Get tax credit up to $8,000!Are you a first time home buyer? Have you or your spouse not owned any primary property in the last 3 years? You might just be eligible for $8,000 credit for the next home you purchase. Credit for purchasing houses was started by the US government to boost the real estate sector and encourage more people to buy homes. The benefits are huge and lucrative enough. Primary property recognized by IRS is the one where you have been residing primarily, as in their records, but have not owned that house. Even your spouse should also not have owned such a house in past 3 years. This is the first eligibility criteria for getting credit under First-Time-Home-Buyer-Tax-Credit-2011.
According to the latest revision, the income constraints have been changed and brought up too. Annual income of a single person should not exceed $125,000 and if you are married, then your combined income should not exceed $225,000.
You get a credit of 10% of the house value, which you’ve purchased. However, there is an upper cap to this limit. You can get maximum of $8,000 credit only. So if you purchase a house of a lesser value than $80,000 then you get 10% of that value. But if you purchase a house of a higher cost, the tax benefit is not given. Maximum gain is on buying a house for $80,000.
To qualify under 2011 house buyer credit, the deal for purchase should be signed between April 30, 2010 and June 30,2010. Only then is the deal considered legible under 2011 provisions.
You should also know that house-buyer credit is different from tax deduction, which is subtracting tax from your earnings. In home buyer credit, you get complete benefit.
So what are you waiting for? File your IRS 5405 form today!
House buyer credit upped to $8,000!
If you have been planning to buy a house finally, there is some good news for you. Released by the Obama Government, the first time house buyers can get a refund of $8,000 on the house purchase! Yes, you heard it right.
All you have to do is to figure out if you fit in the category for the people eligible under this scheme. Also, you should know that this tax credit is not same at the tax deducted from your salary. This gives you a complete refund.
These are some criteria which decide if you can be eligible or not. The most important one is ownership of primary property. According to the provisions of this bill, you or your spouse should not have owned or bought any primary house.
Also you should be aware that tax benefits up to a maximum of $8,000 will be provided. If your house is of a higher value than $80,000, then you are not qualified for the credit. For a house of lesser value, you get 10% credit.
If you are purchasing the house jointly, yours and your spouse’s combined income should not be more than $225,000, but for a single owner, it should not be more than $125,000. Also you can purchase such a house from your own relatives. People under the age of 18 years are also not eligible.
The house deal has to be finalized between April 30,2010 and June 30,2010 to be entitled for this credit. If you are getting your house constructed, then first date of occupancy has to be between these dates.
To get the credit, you have to fill and file Form 5404, the revised version. Note that this cannot be done electronically. For more information, log on to the site today!
First Time Home Buyer Tax Credit 2011
The virtual collapse of the housing market in 2008 was the catalyst for the economic recession which shortly followed thereafter. The cause of the housing market collapse immediately became evident. Lenders, trying to capitalize on the surging real estate market, were offering mortgages to prospective home owners who simply could not afford them. As the adjustable mortgage rates rose homeowners across the U.S. could no longer afford their mortgage payments. Thousands of homes across the country went into foreclosure and banks were left with a huge surplus inventory. This caused many banks to close. The banks that remained tightened up their lending practices, which caused a huge contraction in the market.In an effort to stabilize the economy, the Obama administration issued a huge economic stimulus package in 2008. The detailed stimulus plan took many measures to stabilize the banking institutions and the real estate market. One such measure was the First Time Home Buyer Tax Credit. In an effort to boost the housing market and the failing economy, The First Time Home Buyer Tax Credit of 2008 offered first time home buyers a tax credit of $7,500. The program was wildly popular and helped many tentative consumers acquire their first properties. However, the floundering housing market never recovered and it became apparent that the First Time Home Buyer Tax Credit would need to be extended.
Those who took advantage of rock bottom real estate prices and purchased their first property before April 30th of 2010 still have the opportunity to use these beneficial tax credits. Instead of the $7,500 tax credit offered by the original First Time Home Buyer Tax Credit, the First Time Home Buyer Tax Credit 2011 gives first time home buyers an $8,000 tax credit.
Thankfully, it is rather easy to qualify for the $8,000 tax credit. To qualify for such a credit, a person must not have purchased property in the last 3 years. The tax credit is also only available to income qualified individuals or couples. To be eligible for the credit an individual must simply earn less than $75,000 a year and a married couple should earn less than $150,000. This lenient income qualification makes the tax credit available to most of the population. Any type of home purchase can be eligible as well. Whether the home purchase is a short sale or foreclosure, the home buyer is still eligible. With the availability of cheap properties and such a great incentive, it is surprising that more people have not taken advantage of the tax credit and realized their dream of home ownership.
Did you claim your First Time Home Buyer Tax Credit? If not, then you may need to file an amended return! While there are many tax credits out there for 2011 for homeowners and new homeowners, the First Time Home Buyer Tax Credit is sadly unavailable for most homes purchased after September 30, 2010, but there is an important exception that can make this credit extended through 2011, which we will discuss below. For those homebuyers who qualify for the credit, it is not too late to file an amendment to your tax return to take advantage of this credit.
What is the First Time Home Buyer Tax Credit?
If you purchased a home in 2008, 2009, or 2010, you may be eligible for a First Time Home Buyer Tax Credit. This credit can be used to reduce the amount of tax that you owe Uncle Sam, or it can be a refundable credit, depending on whether or not you owed tax for that year. Even those borrowers who owed no tax were eligible for a refund of up to $8,000 as a new home buyer. But….there is good news for some homebuyers. This tax credit was extended through April 30, 2011 for certain taxpayers!
First Time Home Buyer Tax Credit 2011
That’s right, if you meet certain stipulations, you may be able to claim this $8,000 First Time Home Buyer Tax Credit on your 2011 taxes. This includes certain government employees, including military members, members of the intelligence community, and the Foreign Service.
Eligibility – Regardless of Year
To be eligible for the 2011 First Time Home Buyer Tax Credit, regardless of whether you purchased your home in 2008, or if you are a qualifying home buyer who purchased a home in the first four months of 2011, there are some guidelines that have to be met, including:
n Homebuyer must be a first time home buyer. This doesn’t necessarily mean that if you owned a home ten years ago but don’t own the home now that you are excluded from claiming the tax credit. In fact, the homebuyer must have not owned a home within the past three years. In the event of a married couple, both parties must have not owned a home in the previous three years in order to qualify for the credit.
n Home must be purchased within the timeframe allotted for the credit. If the home is purchased before April 30, 2010, most homebuyers will be eligible for the credit, provided that they meet the stipulation of being a new home buyer. The credit can be applied on the 2008, 2008, or 2010 taxes. If you did not know about the credit at the time, you can invariably file an amended return in order to claim the credit and reap the benefits of getting an $8K credit. For those select government employees and military personnel, that deadline is extended through the first four months of 2011 and is refundable on their 2011 taxes.
n Homebuyer must meet income limits. For instance, if the homebuyer wants to meet the stipulations for getting the credit for a home purchased in 2010, then they could not make more each year than $75K to receive the full benefit of the tax credit. The credit is reduced for those taxpayers with incomes between $75K and $90K. If taxpayers are married, then their combined incomes should not exceed more than $170K to take advantage of the credit.
n Home must fall within certain guidelines. For instance, if you are looking at a home that costs $800K, you will not be eligible for the credit on that home. The home must be purchased for yourself, and you must plan to live in the home. For example, you cannot buy a home for a relative, child, or family member, and the home cannot be part of a gift or an inheritance. This means that children cannot buy their parents a home and parents cannot buy their children a home and qualify for the credit.
n Homebuyer must plan to stay in the home for at least three years. In order to be eligible for the credit, the homebuyer must live in the home for three consecutive years after purchasing the home. If you vacate the property before that three year period, then the money that you received under the First Time Homebuyer Credit will have to be paid back to the U.S. government.
n Homebuyer must be eighteen. It goes without saying that the homebuyer must be eighteen years old in order to buy the home, file and get the credit.
Why the First Time Homebuyer Credit was First Established
The First Time Homebuyer Credit was established to help boost a faltering housing market. It is part of the Economic Recovery act that President Barack Obama signed into law in 2008. This is just one of the federal government’s ranges of bailouts programs that were designed to counteract the housing bubble burst of 2008. It was during this time that many homebuyers walked away from their homes because the price of their homes had fallen so much that they ended up owing more on the homes than they were worth.
Repayment of the Credit
It is important to note that the First Time Home Buyers Credit is a credit that must be repaid over time for those that claimed the credit in 2008. The credit is divided into annual payments of $500 for 15 years, typically, although that can vary depending on the amount of the credit that the taxpayer received. Thus, the credit is basically a fifteen year loan that is interest free. If you bought a home in 2009, 2010, or 2011 and meet that other stipulations of the First Time Home Buyers Credit, then you do not have to repay the credit. For those homebuyers who took the credit in 2008, the credit became payable on their 2010 tax returns, with the exception of some groups of people, like the military, who could forego payment for an additional period of time.
Credit for 2009 and Beyond
The credit changed over time to become not limited to just first time home buyer and it was no longer a flat dollar amount. Instead, the credit was for up to ten percent of the purchase price of the house that you wanted to buy. The income requirements were increased somewhat, with the cut off for receiving the credit being at $125K for singles and $225K for couples.
What to Do if You Think You Qualify
If you think that you qualify for the credit, see your tax professional. For 2009, 2010, and 2011 returns, it is not too late to file an amendment to have the credit returned to you.