The Worker, Homeownership, and Business Assistance Act of 2009 was an attempt to motivate the moribund market, and offers new home buyers a tax credit. This credit is generally around ten percent of the cost, up to a total of $8,000.
A new home buyer or first time home buyer is defined as a buyer who does not own a principal residence for three years before this particular purchase. For married taxpayers, both the buyer and the spouse’s home ownership history will be checked.
Taxpayers’ dependents and those younger than 18 years of age are not eligible for the tax credit program. Also, the tax credit is applicable only to homes not more than $800,000, and will be paid back if the property is sold or once it is no longer the buyer’s principal home within three years after it was acquired.
If you bought your house between 01 January 2009 and 06 November 2009 then you have to earn less than $75,000 if you are single and $150,000 if you are married. On the other hand, if you bought it after 06 November 2009, but before 30 April 2010, then the corresponding income limits are $125,000 and $225,000 depending on your personal situation.
There are some forms to be completed and documentation needed to claim the tax credit. Buyers should complete the IRS Form 5405 and attach to this form a copy of 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 writer has been publishing commentary about taxes for the previous two years. Moreover, the author loves writing regarding New York neighborhoods, including apartments in Midtown and Sutton Place apts.
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